BEIJING, Dec. 8, 2025 /PRNewswire/ -- A report from China Daily:

With 2026 marking the start of the 15th Five-Year Plan (2026-30), it is crucial to further build a unified domestic market and boost domestic consumption. This necessitates creating an even better business environment, with the rule of law remaining a cornerstone for ensuring such an environment.

China's top leaders have emphasized that rule of law constitutes the most sound business environment.

This guiding remark underscores the intrinsic link between the rule of law and economic development, embodying the fundamental principles of economics, jurisprudence and political science.  

The rule of law provides certainty and reduces institutional transaction costs. New institutional economics says that low transaction costs are essential for the efficient functioning of a market economy.

The rule of law also defines property rights, thus stimulating the market. Clear delineation of property rights is also critical for market transactions. The rule of law recognizes and protects property rights through a robust legal framework.

Moreover, the rule of law promotes law-based administration and shapes a fair competitive environment. At its core, the rule of law means governance by rules, with a sharp focus on regulating and restraining government power.

Equally important, the rule of law protects the legal rights and interests of entities. A well-functioning system that resolves disputes through legal, arbitral and mediation mechanisms is a crucial pillar of market confidence.

Over the past five years, China has translated these theoretical principles into tangible reality through a holistic and systematic approach.

The predictability in market rules has been fortified. China has come out with regulations for optimizing the business environment and laid the groundwork for continuous improvements in market access, fair competition and resource allocation mechanisms.

Through the rule of law, property rights protection has been made more effective, government action has become more predictable, and access to legal remedies has been substantially enhanced.

Wrongful cases involving business environments have also been rectified to avoid conflating economic disputes with criminal conduct, sending a clear message in support of entrepreneurial rights.     

The important assertion that "the rule of law is the best business environment" is being implemented across China's vast landscape through scientific legislation, strict law enforcement, impartial judiciary, and widespread adherence to the law.      

The author Luo Peixin is a professor of law and the vice-president of East China University of Political Science and Law.