Hu Kaihong (host):

Good morning, ladies and gentlemen, welcome to today’s policy briefing. This week’s executive meeting of the State Council discussed clearing up and regulating intermediary services for administrative review and approval as well as employment and entrepreneurship policy under the new circumstances. Today, we have two guests with us: Wang Feng, head of State Council Office of the Administrative Review and Approval System Reform and Xin Changxing, vice-minister of Human Resources and Social Security. They will take your questions concerning the above issues.

China Radio International:

My question is for Mr Wang. Why did the State Council’s Office of the Administrative Approval System Reform issue a circular to review and regulate services offered by intermediary agencies that are needed to get the State Council’s administrative approvals?

How will the reform help regulate “Red Capped Intermediary Agencies” (which have links to the government)?

Wang Feng:

The circular to review and regulate these agencies is a result of the government’s ongoing reform of administrative approval procedures. The reform aims to trigger the vitality of enterprises and markets. Several rounds of streamlining have left fewer than 1,000 business items on which the State Council’s departments can exert their power of administrative approval.

We will continue the streamlining, as more items need to be streamlined.

We have noticed quite a number of problems in services offered by intermediary agencies, services that applicants are required to purchase in order to get administrative approval.

For certain kinds of administrative approvals, the State Council’s departments require applicants, such as enterprises, to purchase services from intermediary agencies which prepare materials and documents needed for the approval.

The problems we noticed are:

First, there are too many kinds of applications that need the services. Applicants need to submit various kinds of documents for tests, verification and assessment conducted by intermediary agencies.

Second, it takes too much time to go through the process. Now there are fewer business items that need administrative approval but enterprises spend a lot of time and energy on obtaining services from intermediary agencies. As a result, it still takes a lot of time to get administrative approval.

Third, the charges for these services are unreasonable. Intermediary agencies need to charge clients for the special and technical services they offer. However, the pricing lacks regulation. On the whole, the services are overcharged, imposing too much burden on enterprises.

Fourth, there is a serious issue of monopoly. Some government departments ask enterprises to purchase services from designated agencies if they want to get administrative approval. It leaves the enterprises with no choice, so this is somewhat unfair.

Fifth, there is interest link between some intermediary agencies and some government departments. Some intermediary agencies are public institutions or guilds subordinate to government departments which give administrative approvals.

Some employees with government departments giving administrative approvals take on part-time jobs in intermediary agencies. Some retired government employees take on a new job in intermediary agencies. There is an intricate system of interests linking the agencies and government departments, so it’s hard to ensure that the services are fair and reasonable.

These problems, if left unsolved, will offset the gains we have made so far in the reform of the administrative approval system. To this extent, reviewing and regulating these services offered by intermediary agencies is an important task of the reform.

Regulating the intermediary services aims to give more freedom to enterprises, lower the threshold of market entry and boost business ventures. The reform will improve the intermediary services and regulate their behavior, improve the government’s efficiency, and root out causes of corruption.

“Red Capped Intermediary Agencies” mean intermediary agencies that have a government background. They can be public institutions or guilds subordinate to government departments which have administrative approval power. They can be designated by the government departments to carry out special services. Some government employees take on part- time or full-time jobs in these agencies.

The circular issued to regulate these agencies requires that intermediary agencies subordinate to government departments must not offer services related to the government departments’ administrative approvals. If they want to offer such services, they must form a company or break away from the government departments.

The circular forbids government departments from designating intermediary agencies to carry out certain services so that enterprises can choose the intermediary agencies they want.

The circular also forbids government employees from working in intermediary agencies. Retired government employees should not get paid for their work in intermediary agencies.

China Daily:

Minster Xin, what’s the State Council’s consideration in introducing the policy on promoting employment and entrepreneurship under the new circumstances? And what are the highlights? Thank you.

Xin Changxing:

I’d like to explain more on top of the background material I’ve offered.

The document is part of China’s efforts to improve employment policies and be innovative to support entrepreneurship with policies. Just as Industry 4.0 is a concept for the modern era, I think the following policy is the 4.0 version of China’s active employment policy. To make it clear, China had an active employment policy in 2002, when the State Council issued a circular about the re-employment of laid-off workers. I think this document, which was the framework of China’s active employment policy, could be considered as the 1.0 version.

In 2005, the State Council issued another circular about strengthening efforts on employment and re-employment, which was the 2.0 version.

In 2007, China enacted the Law on Promotion of Employment, the first of its kind, which regulated many of the policies as laws.

Later in 2008, the State Council announced a circular on promoting employment, which further regulated the already existing policies.

I think the 3.0 version came amid the financial crisis, when a package of policies were published to deal with the situation.

By the beginning of 2009, the State Council issued a circular on how to ensure employment under the current situation, which was known as more active employment policies.

A whole package of policies were released on training and re-employing people by making use of various services such as unemployment insurance, and the gradual reduction of social insurance costs after the financial crisis.

This week’s executive meeting of the State Council also discussed how to further promote employment, especially entrepreneurship by introducing a series of policies. There are many highlights.

As for the second question, I think I’ve already mentioned the prominent highlights just now. You can also find the highlights in the background material.

I think the most prominent highlight is that the word “entrepreneurship” was emphasized this time. Unlike before, as I’ve mentioned, the upcoming policy combined employment and entrepreneurship in a more effective way.

In fact, the change has come together with the change of guidelines on employment. The expression “the government should promote employment” has turned into “the government should promote employment and encourage starting businesses”.

But how to encourage entrepreneurship? The government has put forward the new engine of mass entrepreneurship and innovation. A whole package of policies are required to drive the new engine. That’s why the document especially stressed entrepreneurship.

The whole document has offered special coverage in this regard, and there are a number of aspects.

First, we will build an easy and friendly access environment, which in fact is about lowering the threshold.

Second, we will cultivate public platforms for entrepreneurship and innovation, and also provide low-cost space for entrepreneurship.

Third, we will seek innovative means for entrepreneurship financing, which was the biggest difficulty for business start-ups.

Fourth, we will provide loans for entrepreneurship. While different quotas were offered to different people in the past, we unified the maximum amount of small-sum secured loans to 100,000 yuan ($16,000).

Fifth, we will step up efforts in tax cuts and reduction of tax rates.

Sixth, we will mobilize researchers’ initiative to start business and promote the transformation of scientific achievements.

Seventh, we will encourage entrepreneurship among the rural workforce.

Eighth, we will cultivate a good atmosphere for public entrepreneurs.

Ninth, we will strengthen entrepreneurship services.

Therefore, I think the most prominent highlight is that the policy emphasized both promoting employment and encouraging entrepreneurship.

People’s Daily:

As there are so many service agencies of various kinds, how do you define which service agencies are the targets of this round of checks? What methods are you going to use? Thank you.

Wang Feng:

This time we are mainly focusing on checking service agencies related to administration approval, meaning service agencies which charge customers for providing technical services in the approval process. Services that are not linked to administration approval, such as in the case of a company paying a service agency for providing services to improve product quality, are not the target of our move.

Besides, our aim is not to restrict the development of administration approval service agencies but to have them well regulated and market-orientated, to raise the level of their services and to guide the service agency market to develop in a healthy way.

Wang Feng:

Our methods to check the agencies include:

First, to straighten the items. For example, we will make it clear that aside from those demanded by law, the government will not ask for other items for administration approval, while agency services should not cover issues that can be settled through supervision.

Second, to break monopolies. We will stop approving agencies’ qualifications that are not approved by law and cancel restrictions set by ministries for agencies to work in the industry. We will also ban quantitative restrictions on agencies by giving a quota.

Wang Feng:

Third, to end interests overlapping. Economic relations between some agencies and the government organs in charge of approval will end, all units under the organs are banned from carrying out relevant agency services. Service agencies that have to be kept must be turned into companies. Government organs cannot list agencies to carry out services related to their approval. Industry associations and chambers of commerce have to cut relations with the government organs in charge of approval. Civil servants cannot keep positions in agencies.

Fourth, to regulate fees. Prices of agency services should be mainly market-oriented. Those areas where there are not enough competitors to allow market conditions should be covered by the government’s pricing supervision list, but the list should be as short as possible.

Fifth, we will make a list for all the items of service that can be provided by agencies. The government will not ask for applicants to handle items that are not on the list to get administration approval. New items to be added in the list will be strictly overseen.

Sixth, to strengthen supervision. We will clarify duties of government organs in charge of certain industries and demand they be set up and perfect guidance and standards on agency services, guide and supervise the agencies to improve their service mechanisms, carry out law enforcement, build up credit systems and the mechanism for examination and appraisal.

Reuters:

About the unemployment rate in cities and towns, it reached 4.05 percent in the first quarter, which is no big change from the 4.1 percent by the end of last year. But as the economic downward pressure is big now, how can the employment rate still be stabilized? Besides, the Bureau of Statistics published a survey-based unemployment rate of 5.1 percent, could you please explain the differences?

Xin Changxing:

The unemployment rate did indeed not change much, and the change in the number of unemployed people is also not big. Our number of registered unemployed people is basically steady. There are some differences between registered unemployment rate and survey-based unemployment rate. The latter is based on home visits, which is drawn from samples. The registered unemployment rate counts only those who come to job service centers to register and ask for employment services. As a result, the registered unemployment rate is usually lower than the survey-based figure.

The two numbers are sometimes different, usually a percentage point deviation. We’ve been comparing the two for many years. The survey-based unemployment rate has not been published in detail, so we’ve been pushing forward its disclosure and made it public. The two have different meanings. Some countries use both rates, and they differentiate as well in these countries.

Xin Changxing:

I think you care more about the fact that employment seems stable in the economic downturn. First of all, since last year, especially in the first quarter of this year, the employment is stable overall. The stability is shown as the unemployment rate is still at a relatively low level.

If that fact alone is still not enough for a safety net, the number of people who applied for unemployment insurance is also relatively stable. This year by far we have tens of thousands more people applying for the insurance than the end of last year. I paid special attention to the reason of that increase. I found out that some of them worked for public welfare before. We have regulations that people can serve in positions of public welfare for no longer than three years. In some provinces, many people reached their time limit at the same time so they applied to enjoy the employment insurance. That led to the increase in unemployment insurance claimers by 60,000 to 70,000, but that is not a big change compared with last year.

I seldom publish the number of people who claim for the unemployment insurance, but I think it’s OK to tell you at this circumstance. There are 2.147 million people who are enjoying the insurance by the end of March, which is 70,000 more than the end of last year. But in recent years, the number has basically been around two million, so the change is not big. At least, there is no major layoff from enterprises. The current unemployment insurance covers a wide range, so if there are a lot of layoffs, they will enjoy the insurance for sure.

Xin Changxing:

Second, from the point of the demand and supply in the market, it is relatively stable. We have the ratio of jobs to job seekers at 1.12:1 in the first quarter, which is an increase over the same period last year, though a small one. It means for every 100 job seekers, there are 112 jobs. The jobs are enough, at least in the job service agencies.

Thirdly, the employment of college graduates, including migrant workers who come into cities to work, is stable overall. So that is the general situation of the employment.

But we also noticed some changes that should be noted. The number of new jobs created in cities in the first quarter is obviously less than last year’s same period. We had 3.24 million new jobs in the first quarter, but that number was 3.44 million last year, a 200,000 decrease.

Some explained that it is due to the late arrival of the Spring Festival this year, in addition to the fact that migrant workers were not as eager to rush back to work as before. They used to come back to work three or five days after the lunar new year, but now they’ll wait for at least 15 days. That may have been a factor.

Besides, it could also reflect the fact that the creation of new jobs is indeed slowing down amid the economic downturn. We need to keep observing and paying attention to this aspect to see how it goes.

As for the point you mentioned about the incompatibility between new jobs in cities and the economic growth, my explanation is that the employment indicator usually lags behind the economic growth indicator, which is a fairly common phenomenon in economy.

Xin Changxing:

I’ll explain why the overall employment is stable. According to my analysis, first of all, the economic growth is sill at a relatively high speed, even though it’s slowing down. It is still beyond 7%, like last year was 7.4%.

Second, the economic base is large. A one percentage point of increase at this moment can bring a whole new different growth in the economy and employment.

Thirdly, the economic structure is being optimized. For instance, the service sector has been taking increasingly high proportion of the entire economy. We all know that the third industry has the strongest pull to employment.

Fourthly, the dividends of reform has been released. Since last year, the deepened reform of business approval procedures have facilitated the fast growth in people’s entrepreneurship and innovation. For example, there are 10,000 startups a day on average in the first quarter. The growth is very fast, due to various factors. The positive employment policies are also playing its role, which made the overall employment stable. We made our explanations through these aspects.

Of course, we are not wildly optimistic. I work on employment-related issues. I’ve been closely following the trend in employment, trying to see what influences and challenges will emerge under the economic downturn and the further adjustment of the economic structure.

We’ve been paying special attention to issues like the decrease in the newly created jobs in cities and towns, following the new moves and trending changes in these aspects. I am confident, as our economy is running within the reasonable range, and we’re implementing positive employment policies to encourage people to start business and innovate. I have the confidence to keep China’s employment stable.

Thank you!

Economic Daily:

Minister Xin, you mentioned entrepreneurship and employment of university graduates. What is the employment situation facing graduates this year under downward economic pressure? What measures will the government take to promote employment for graduates?

Xin Changxing:

I will explain this in short. First, the general situation of graduate employment is stable. Honestly, though, the number of university graduates is rising -- 7,490,000 this year. Meanwhile, there aren’t many vacancies, relatively speaking. Therefore, the pressure is increasing.

I feel that the biggest problem is the employment of university graduates. I often read the employment yearbook: The number of graduates exceeded 1 million in 2001, 2 million in 2004, 3 million in 2005, 4 million in 2007, 5 million in 2008, 6 million in 2011, and 7 million last year.

On the other hand, it is a good thing. Such a great number of university graduates moving into society to support economic development, which shows great economic potential. Our promotion of mass entrepreneurship and innovation relies on the full utilization of these talents. Our economy is transforming in real life, and there are not enough job vacancies. It is inevitable that problems occur during the transformation. But without these talents, how can we talk about innovation?

Second, economic development, industrial upgrading and transformation are the key to the problem. Only when industries develop from a lower level to a higher level can more ideal job vacancies be created for university graduates. Speaking about specific policy, a document by the State Council stresses that graduate employment would continue to be the priority. There are many specific policies listed in the document. I will not explain them here as the document will soon be released.

Fourth, the “two plans” will continue to be carried out by the Ministry of Human Resources and Social Security and other related ministries. One plan is the promotion of university graduate employment, the core of which is to bring unemployed graduates into the employment service system and help them find jobs as soon as possible. The system also provides career training and internships. As the Premier said, we cannot make graduates like “kites with broken string”.

The other plan is guiding university students in entrepreneurship. The number of university students starting their own businesses last year was 480,000, which is 120,000 more than the year before. University graduates can receive most benefits from the new policy. They are the ones with highest enthusiasm and biggest potential.

Xinhua News Agency:

Director Wang, what is the current situation concerning the overhaul and regulation of the administrative review procedures? Is there any information available about developments? Furthermore, does the work start simultaneously nationwide and how will you evaluate it? Thank you.

Wang Feng:

Many places have undertaken the task of overhauling and regulating the intermediary services in relation to the administrative review procedures. The document, issued by the State Council, mainly aims at the administrative review items of each department.

In compliance with the requirement of the State Council, local governments can carry on the reform on the basis of their situations.

In accordance with six measures noted in the document, each department will put forward a plan. Together with the National Development and Reform Commission, the Ministry of Civil Affairs, the Ministry of Finance, and the Legislative Affairs Office of the State Council, we will review the plans and make them public.

As to the evaluation, companies and society have the right to judge. And the success of reform depends on the effectiveness and efficiency of administrative review procedures, reduction of companies’ burden, and breakup of monopoly and interests links. The reform will not be launched behind closed doors. Instead, tested by practice, the reform should be beneficial to companies and the rights of judgment should be left to the people.

Kyodo News:

Talking about “Red Capped Intermediary Agencies”, there used to be no relevant laws or regulations to address the issue. And this is the first chance to clearly raise the question, how will you fight against such phenomenon as “Red Capped Intermediary Agencies”?

Wang Feng:

To regulate “Red Capped Intermediary Agencies” is key to current clearing up work as most of the problems that exist in the operation of intermediary agencies have something to do with it.

Many measures, such as breaking monopolies, cutting off the interest link and managing by the list are all conducive to solving the issue. We also have to regulate the specific conduction with strict daily management. Every department has to enhance supervision within their responsibility to find the problem and solve it.

Hu Kaihong (host):

That is the end of the policy briefing, thank you.