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State Council seeks further reform on commercial system and SOEs

Updated: May 18,2016 8:57 PM

The State Council executive meeting on May 18, presided over by Premier Li Keqiang, decided to continue reforms on the commercial system to create a better market environment for mass entrepreneurship and innovation, and to further optimize State-owned enterprises (SOE) to increase their competitiveness.

The meeting said the commercial registration system reform should still be an important aspect for related ministries to promote administration streamlining, power delegation and service optimizing. This can promote new market entities to maintain rapid growth and further stimulate the vitality of enterprises.

Administration streamlining and power delegation is the important part of supply-side structural reform. It can help the innovation-driven development strategy, promote mass entrepreneurship and innovation, increase employment and promote economic development. Next steps are as follows:

First is to continue reducing pre-approval items for business registration, exploring the management of negative lists for business licenses, and accelerating the development of pilot areas for separate business licenses.

In addition to the consolidation of three types of business licenses, social insurance and statistics registration licenses will also be integrated into the “three-in-one business certificate”, bringing five licenses into one and reducing the operating costs for entrepreneurship.

Second is to support those who become unemployed during the process of eliminating overcapacity. They will be encouraged to start their own businesses with policy support in company registration, business operation, tax reduction and obtaining secured loans.

Third is to expand the coverage of “three-in-one business certificate”. The State Council decided to further integrate the application process for business licenses and tax registration certificates. A self-employed businessman will need to fill out only one form and submit one set of materials to apply for certificates.

Fourth is to create an equal business environment and improve the market exit mechanism. To promote fair competition, the government needs to simplify the exit procedure and increase the vitality of market entities according to the rule of market competition.

Acknowledging the great contributions made by SOEs in national economy and social development, the State Council asked SOEs to stick to mandates from the central economic work conference and the government work report and promote development based on reform.

The market should play a decisive role in resource allocation, and the government should play a better role for SOEs to improve quality and efficiency, the meeting said. It made the following decisions to address problems such as weak major businesses, redundant personnel and low efficiency:

First, promote structural adjustment, guide SOEs to do well in major businesses and improve core competitiveness. Special campaigns will be launched to help enterprises in difficulty, weed out outdated production capacity in steel and coal industries, and accelerate enterprise restructuring and integration.

The meeting decided to reduce about 10 percent of the current production capacity for steel and coal industries in 2016 and 2017. SOEs are asked to transfer or withdraw non-core assets, prevent ongoing losses, control the number of employees working in enterprises of non-main businesses, strictly set positions and cut the number of administrative departments and personnel.

The meeting also urged accelerating the establishment of labor employment and income distribution mechanisms that better conform to market economy. SOEs are encouraged to actively and safely introduce all kinds of social capital to participate in and support structural adjustment.

Second, develop the new economy with innovative concepts. With the help of the Internet Plus initiative and big data technology, industrial capacity and product quality will be improved. SOEs will be encouraged to set up national demonstration zones to promote mass entrepreneurship and innovation, with efforts to achieve the Made in China 2025 strategy and inspire creativity of the whole nation.

Third, reduce hierarchy in management. Management of most SOEs should be reduced from the current five to nine levels to no more than three or four levels, and legal entities affiliated with SOEs should be cut by 20 percent within three years. Oversight of State assets should be improved with innovative ideas, to prevent any losses or erosion.

Fourth, reduce costs and enhance productivity. By strengthening oversight on product costs and reducing stock and debts, SOEs will save up to 100 billion yuan by the end of next year.