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BEIJING, June 27 (Xinhua) -- The number of China's private sector entities reached 185 million by the end of May, increasing 2.3 percent year on year, official data showed Friday.

The private sector, including private enterprises and individual businesses, accounted for 96.76 percent of the total business entities in China as of the end of May, the State Administration for Market Regulation said.

The number of private enterprises had exceeded 58 million, up 5.2 percent from a year ago. These enterprises have continuously increased investment in technological innovation and actively expanded into strategic emerging industries such as new energy and high-end equipment manufacturing, becoming a crucial pillar for industrial upgrading and stable economic growth, the regulator said.

The number of individual businesses increased 1 percent year on year to 127 million by the end of May, said the regulator, adding that individual businesses have met the diverse needs of residents through flexible and varied business models in sectors like community retail, catering services and home maintenance.

In 2024, private enterprises contributed over half to China's foreign trade and tax revenue, while accounting for more than 80 percent of urban employment. More importantly, they are playing a major role in sharpening the country's innovation edge, generating over 70 percent of China's technology innovation achievements.

To optimize the development environment for the private sector, ensure fair market competition, and promote the growth of both the private economy and private entrepreneurs, China promulgated the Private Sector Promotion Law earlier this year, strengthening legal protections and injecting fresh momentum into a key driver of the world's second-largest economy.