Feng Lixia: Creating a Favorable Rule of Law Environment to Promote High-Quality Development
The Fourth Session of the 14th National People's Congress (NPC) voted to adopt the Ecological Environment Code of the People's Republic of China, the Law of the People's Republic of China on Promoting Ethnic Unity and Progress, and the National Development Planning Law of the People's Republic of China. The simultaneous deliberation and passage of three such significant laws by a single session of the NPC, given their heavy weight and innovative content, will leave a profound mark on legislative history. Rule of law plays a vital role in "consolidating fundamentals, stabilizing expectations, and benefiting the long term" [1]; the promotion of high-quality development cannot be divorced from the support and guarantee of the rule of law. General Secretary Xi Jinping has pointed out: "A rule-based environment is best suited to gathering people and wealth, and is most conducive to development," and we must "create a favorable rule of law environment for promoting reform, development, and stability." As an important landmark concept within Xi Jinping's Economic Thought and Xi Jinping's Thought on the Rule of Law, the "rule of law economy" profoundly reveals the distinct characteristics of the socialist market economy and points out the goals and tasks for China's economic and legal construction in the New Era. To deeply study and implement Xi Jinping's Economic Thought and Xi Jinping's Thought on the Rule of Law, we must profoundly grasp the internal connection between developing a socialist market economy and perfecting socialist rule of law, and become adept at using rule of law thinking and methods to implement the New Development Philosophy, thereby creating a favorable rule of law environment for promoting China’s high-quality development.
The socialist market economy is essentially a rule of law economy
Market and law are the two cornerstones of a modern economy; they are closely linked and coexist in a symbiotic relationship. Since the 18th CPC National Congress, General Secretary Xi Jinping has made a series of important expositions regarding the relationship between the market economy and the construction of the rule of law. For instance, at the Central Economic Work Conference in 2014, he pointed out that "the socialist market economy is essentially a rule of law economy. Chaos in the economic order often stems from failure to follow the law or failure to prosecute violations. Therefore, we must persist in rule of law thinking, strengthen our sense of the law, and regulate and govern the economy in accordance with the law. The essential requirement of a rule of law economy is to grasp and respect objective laws [2]"; at the first meeting of the Central Commission for Comprehensive Law-based Governance in 2018, he emphasized that "to implement the New Development Philosophy and achieve the transition of the economy from high-speed growth to high-quality development, we must persist in using the rule of law as our lead"; at the second meeting of the Commission in 2019, he emphasized that "the market economy is a rule of law economy, and we must use the law to regulate the boundaries between the government and the market"; at a symposium for entrepreneurs in 2020, he elucidated that "legal consciousness, the spirit of contract, and the concept of abiding by agreements are important normative consciousnesses in modern economic activity, and are also significant requirements for a credit-based economy and a rule of law economy"; and at the 2024 Central Economic Work Conference, he further pointed out that where the government "takes action [3], it must continuously build a rule of law economy and a credit-based economy, improve market rules, and take the lead in observing these rules." These important expositions profoundly reveal the internal relationship between the market economy and rule of law construction. They not only point the way forward for socialist rule of law construction but also provide the fundamental compliance for accelerating the construction of a high-level socialist market economy system and guaranteeing China's high-quality development.
Developing a socialist market economy inevitably requires raising the level of the rule of law. A basic feature of a market economy is the use of legal forms to regulate and adjust economic activities, using rule of law methods to drive the allocation of resources by the market under the influence of the law of value, the law of competition, and the law of supply and demand. The socialist market economy is a market economy under the socialist system; it conforms to the general laws of market economies and inherently requires the rule of law as a vital support for economic operation, which determines that its essence is a rule of law economy. In the process of developing a socialist market economy—whether in utilizing price and competition mechanisms to guide the rational flow of resource factors, or in maintaining a market environment of fair competition and honesty—the guarantee of the rule of law is required. Only by fully exerting the protective role of the rule of law over the operation of the socialist market economy—for example, by using the stability and equality of the law to endow market entities with clear property rights and fair competitive opportunities, and using the authority and coerciveness of the law to ensure the smooth flow of the economic cycle—can we organically combine the superiority of the socialist system with the efficiency of the market economy.
Combining an "effective market" and a "competent government" is the core issue in building a rule of law economy. Handling the relationship between the government and the market is the core issue of economic structural reform. General Secretary Xi Jinping pointed out: "On the question of the role of the market and the role of government, we must utilize dialectics and the 'theory of two points' [4]; both the 'invisible hand' and the 'visible hand' must be used well." This requires that, under the premise of respecting the laws of the market economy, we use legal forms to clarify the boundaries between government and market and to regulate and adjust various interest relationships. This ensures that the market's "invisible hand" and the government's "visible hand" each fulfill their responsibilities and cooperate to form an economic order that is both "dynamic without chaos" and "well-managed." Specifically, we must minimize direct government allocation of resources and direct intervention in micro-economic activities, allowing the market to play the decisive role in resource allocation. Of course, this does not mean the market plays the entire role; we must also better exert the role of the government—that is, promoting an "effective" market and a "competent" government, allowing both to play to their strengths and combine more effectively. Under the conditions of a rule of law economy, a "competent government" is premised on being a "rule of law government" that must "take action in some areas and refrain in others." Taking action means that "statutory duties must be performed," while refraining means "no action may be taken without legal authorization." By better exerting the role of the government, we use the "tangible hand" of the government to manage those matters that the "intangible hand" of the market cannot manage or manages poorly.
Continuously optimizing the business environment is an important task in building a rule of law economy. General Secretary Xi Jinping has repeatedly emphasized: "The rule of law is the best business environment." It can ensure fair competition, reduce transaction costs, and provide stable legal protection for all types of market entities. China possesses an ultra-large-scale domestic demand market. Under the overall framework of national legal unity, promoting economic operations based on a unified market fundamental system, a unified scale for government behavior, and unified market supervision and law enforcement on a national scale is conducive to further stimulating the potential of China's ultra-large market and improving overall market efficiency. For example, by deepening the reform of the administrative law enforcement system, we can clarify the discretionary benchmarks for market supervision and administrative penalties to unify enforcement; by unifying the scale of government behavior, we can clarify what local governments can and cannot do when promoting economic development, particularly in attracting investment. Only by using a unified legal system, unified enforcement standards, and a unified judicial adjudication scale to regulate the economic promotion behavior of local governments—and by clearing away and abolishing various "local policies" [5] that hinder the construction of a unified national market and fair competition—can we eliminate problems such as inconsistent rules, non-uniform standards, and uncoordinated supervision. This is the only way to accelerate the construction of a unified national market that is efficient, standardized, fair in competition, and fully open.
Rule of law construction permeates the entire process of the socialist market economy's operation
General Secretary Xi Jinping has pointed out: "We must persist in taking the law-based governance of the country as the basic strategy for the Party to lead the people in governing the country, and taking the rule of law as the basic method for governance, continuously pushing forward the construction of a Rule of Law China." Promoting high-quality development against the backdrop of building a Rule of Law China means we must accelerate the construction of a rule of law economy and promote the deep integration of the socialist market economy with rule of law construction. Specifically, this involves bringing every link of production, distribution, circulation, and consumption into the orbit of the rule of law, and using rule of law thinking and methods to regulate and lead high-quality development.
In the production link, we use rule of law methods to confirm and protect property rights, achieving equal protection for all market entities. Production is the starting point of the economic cycle; the rule of law activates production factors and market vitality by strengthening property rights protection. The property rights system is the cornerstone of a market economy, directly relating to the allocation efficiency of production factors, the intensity of incentives for innovation, and the future expectations of market entities. In the production link, exerting the role of the law to clearly define property rights can effectively prevent infringement by other entities and help market entities clarify the boundaries of their rights, forming reasonable expectations regarding policy direction and economic development. This will fully incentivize market entities to carry out investment and trading activities, thereby stimulating market vitality and potential. Currently, China has established and is continuously improving a legal system for property rights protection centered on the Constitution and supported by the Civil Code and other legal norms. For example, in 2016, the CPC Central Committee and the State Council issued the Opinions on Improving the Property Rights Protection System and Protecting Property Rights in Accordance with the Law, persisting in the "Two Unswervinglys" [6] and making important deployments for the legal protection of property. The Law on the Promotion of the Private Economy, effective from May 20, 2025, for the first time codifies the "Two Unswervinglys" as a legal system, stipulating that "the personal rights, property rights, and lawful rights such as operational autonomy of private economic organizations and their operators are protected by law, and no unit or individual may infringe upon them." Looking to the future, further improving relevant legal systems and consolidating the rule of law foundation for property rights will facilitate the equal protection, mutual complementarity, and common development of all types of ownership, further encouraging state-owned enterprises to act boldly, private enterprises to venture forward, and foreign enterprises to invest.
In the distribution link, we use rule of law methods to determine distribution rules, balancing efficiency and equity. Distribution is compatible with incentives and closely linked to social fairness. The rule of law can provide a stable, transparent, and predictable institutional framework for distribution activities, ensuring that the distribution process both stimulates market vitality and production efficiency while maintaining social fairness and justice. Specifically, in primary distribution, the implementation of legal systems regarding property rights, contracts, and labor can protect the income earned through the lawful operation and honest labor of workers, ensuring that various factors are evaluated by the market and remuneration is determined by contribution. In redistribution, the implementation of legal systems regarding taxation and social insurance can strengthen the government's regulatory function and intensity, standardize the use of public funds and the provision of public services, and enhance the universality and "safety net" nature of social security. In tertiary distribution [7], perfecting legal systems—including the Charity Law and the Law on Donations for Public Welfare—and matching them with rules in fields like social organization management, information disclosure, and supervision, while also aligning them with the institutional arrangements of primary and secondary distribution, can ensure that tertiary distribution proceeds on a voluntary, transparent, and efficient track, promoting social equity and serving the goal of common prosperity for all people.
In the circulation link, we use rule of law methods to regulate market behavior and maintain fair competition. Circulation is the hub connecting production and consumption and is a vital link in the operation of the market economy. In the circulation link, the rule of law establishes the basic codes of transaction, clarifying principles such as voluntariness, equality, fairness, and honesty and credibility, thereby setting a baseline for market behavior. On one hand, by legally guaranteeing the full performance of contracts, punishing breaches of contract and loss of credit, and promoting the role of the social credit system—incorporating law-abiding and contract-performance status into credit records—we can build a solid foundation of market integrity, reduce institutional transaction costs, and provide a rule of law guarantee for smoothing the economic cycle and maintaining fair competition. For example, the issuance and implementation of the Opinions on Promoting the High-Quality Development of the Social Credit System to Facilitate the Formation of a New Development Pattern further exerted the role of credit in improving resource allocation efficiency, reducing institutional transaction costs, and preventing and deflecting risks. On the other hand, we use the unity of national rule of law to guarantee the construction of a powerful domestic market, strengthening supervision over the market process in accordance with the law, and effectively curbing unfair trading behaviors such as false advertising, forced transactions, and price fraud, while breaking down local protectionism and market fragmentation. For instance, in 2025, national procuratorial organs launched a special supervision campaign against illegal cross-regional enforcement and "profit-driven" [8] law enforcement and justice, forcefully protecting the legitimate rights of enterprises and promoting strict law enforcement and impartial justice. This helps promote the establishment of a high-standard market system that is unified, open, competitive, orderly, and institutionally complete, consolidating the institutional foundation for high-quality development.
In the consumption link, we use rule of law methods to protect consumer rights and promote a virtuous economic cycle. As the terminal link of the economic cycle, consumption is both the ultimate goal of production and the primary driver of economic growth. The quality of the consumption environment and the level of protection for consumer rights directly affect the release of domestic demand potential and the smooth flow of the economic cycle. By further improving the legal system in key areas such as consumer rights protection, product quality, food safety, price supervision, and advertising integrity, and by perfecting rules regarding personal information protection, platform governance, and after-sales service—while strengthening the implementation and supervision of legal norms—we can reinforce the responsibilities of market entities. This prevents fraud, forced transactions, and "overlord clauses" [9], effectively protecting consumers' right to know, right to choose, and right to fair trade. In short, the rule of law guarantee in the consumption link will promote standardized operations by market entities, improve the quality of commodity supply, clear the bottlenecks in the economic cycle, and promote the formation of a virtuous cycle where demand drives supply and supply creates demand.
Practical paths for promoting the construction of a rule of law economy during the "15th Five-Year Plan" period
Building a rule of law economy and creating a favorable rule of law environment for promoting high-quality development is...
The practical path for coordinating development and security during the "15th Five-Year Plan" period [10] is, even more so, a long-term strategy for modernizing the national governance system and governance capacity, oriented toward the 2035 Long-Range Objectives [11]. Building a rule-of-law economy and creating a favorable legal environment for promoting high-quality development centers on adhering to systematic planning, coordinated action, and integrated advancement across all links—legislation, law enforcement, justice, and law-abidingness. It requires permeating all links and fields of high-quality development with rule-of-law thinking and methods to provide a fair, stable, and predictable legal environment for the operation of the socialist market economy.
Improving legislation and perfecting the legal system of the socialist market economy. General Secretary Xi Jinping has pointed out: "Development must be high-quality, and legislation must also be high-quality. We must guarantee and promote continuous and healthy economic development through high-quality legislation." Since the start of the New Era, under the strong leadership of the Party Central Committee, the legal system of the socialist market economy has been continuously improved. Currently, China's economy is at a critical juncture of "climbing slopes and crossing hurdles" [12] toward high-quality development. During the "15th Five-Year Plan" period, adhering to the theme of promoting high-quality development, accelerating high-level scientific and technological self-reliance and self-strengthening, and developing new quality productive forces according to local conditions urgently requires the guarantee of a more mature, finalized, systematic, complete, authoritative, and efficient legal system. We must center on the needs of promoting the deep integration of scientific and technological innovation with industrial innovation and promoting the optimization and upgrading of the economic structure. By strengthening legislation in key, emerging, and foreign-related fields, we should accelerate the improvement of legal systems that embody equality of rights, opportunities, and rules. This will further incentivize innovation, tolerate failure, and better promote the development and growth of new quality productive forces.
Regulating law enforcement and optimizing a fair, efficient, and transparent market economic environment. Law enforcement is the key to the realization and effectiveness of a rule-of-law economy. Only by adhering to strict, standard, fair, and civil law enforcement—integrating enforcement with service and combining the defense of bottom lines with the promotion of development—can we effectively construct a service-oriented enforcement model characterized by "prioritizing prevention, exempting penalties for minor violations, severely punishing serious violations, ensuring penalties match offenses, and conducting follow-up visits." This approach better achieves the organic unity of legal, social, and political effects within the enforcement process, allowing market entities and the masses to see a clean and upright atmosphere [13] in every act of enforcement and to feel fairness and justice in every enforcement decision. Enforcement should be precise, focusing on key areas such as market order and the business environment, fair competition, intellectual property protection, financial regulation, protection of workers' rights and interests, and the digital economy. We must crack down severely on various illegal acts such as unfair competition, infringement, and counterfeiting; regulate enforcement behaviors involving enterprises; and strengthen enforcement supervision in new fields and business formats. We must prevent and correct irregular cross-regional enforcement and "profit-driven enforcement" [14]. By using rule-of-law thinking and methods to maintain a fair, competitive, safe, and orderly market, we can make the rule of law the solid bedrock of a favorable business environment.
Ensuring justice and safeguarding a regulated, fair, and stable market economic order. The core of the judiciary’s guarantee for a rule-of-law economy is to protect rights, stop infringements, and stabilize expectations through impartial justice. We should give full play to the function of judicial adjudication in "resolving disputes and ending grievances" [15] and the guiding role of fair judgments. Focusing on major and difficult disputes in the economic field, we must hear all types of cases fairly and efficiently in accordance with the law, clarify the boundaries of property rights protection, regulate transaction behavior, and define competition rules, thereby guiding market entities to enhance their awareness of the rule of law and abide by the spirit of contract. We must strengthen judicial protection for property rights and the rights of entrepreneurs, cautiously adopt compulsory measures that restrict personal and property rights, and strictly distinguish between legitimate financing and illegal fundraising, property disputes and malicious occupation, and personal property versus corporate property. This prevents economic disputes from being handled as crimes and civil liabilities from being turned into criminal liabilities. We should improve mechanisms for effectively preventing, identifying, and correcting wrongful cases involving enterprises and earnestly resolve problems such as selective enforcement as well as the "difficulty of execution" and "disorderly execution" [16]. We must persist in and develop the "Fengqiao Experience" in the New Era [17], perfecting a coordinated work structure linking people's mediation, administrative mediation, judicial mediation, and professional industry mediation to promote the organic connection and collaborative effectiveness of various dispute resolution channels.
Ensuring law-abidingness by all and cultivating market entities of integrity. Enterprises and other market entities interact with all aspects of society and mobilize various resources such as personnel, finance, and materials; operating according to the law is a principle they must follow. Whether they are public-owned or non-public-owned enterprises, they must achieve law-based operation, law-based management, and law-based protection of rights. Legal bottom lines must not be breached. They must resolutely refrain from illegal acts such as tax evasion, smuggling, and the production or sale of counterfeit goods. They must resolutely avoid "unconscionable acts" [18] such as cutting corners, giving short weight, or selling inferior goods at high prices. We must persist in treating universal legal education and law-abidingness as long-term foundational work for the law-based governance of the country. We must take effective measures to strengthen publicity and education, striving to make the practices of respecting, learning, observing, and using the law common practice [19] throughout society, further enhancing the rule-of-law awareness of market entities. At the same time, we should strengthen the contract spirit and compliance concepts of market entities and give play to the exemplary role of entrepreneurs in law-abidingness and integrity, thereby driving the improvement of the rule-of-law literacy and level of civilization across the whole of society.
(The author is a specially invited researcher at the Research Center for Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, Central Party School (National Academy of Governance))
Source: People's Daily (March 13, 2026) Editor: Huihui