The State Council has issued a notice to streamline and regulate earnest payments in engineering and construction sectors to reduce the burden on enterprises and stimulate the vitality of the market.

Streamlining and regulating earnest payments in the construction sector, according to the State Council, will help develop the credit economy, build a standardized construction market, promote fair competition, and boost transformation and upgrading of the construction industry.

The State Council decided to trim off earnest payment items, except those required to guarantee construction enterprises’ bidding, contract implementation, construction quality, and payment to migrant workers in accordance with laws and regulations, which can be paid by the enterprise through letters of guarantee issued by banks.

The notice urged local governments to refund enterprises by the end of 2016 for the abolished items of earnest payments, and strictly implement related regulations to ensure timely refunds of the retained four items.

Related laws and regulations should be promptly revised to improve the management and implementation of retained earnest payments, as stated in the notice. Oversight on earnest payments for construction quality should also be strengthened, with amounts not exceeding 5 percent of the overall project costs.

A different mechanism to collect earnest payments for migrant workers’ wages should be adopted, according to the notice. Also, local governments and ministries should not set new items for earnest payments in the field of engineering and construction in any form unless they have approval from the State Council.

The notice urged local governments and related departments to create specific programs and strengthen supervision to actively and steadily streamline and regulate earnest payments in engineering and construction sectors.