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China to further supply-side structural reform, cut overcapacity and corporate costs to boost innovation 

Xu Wei
Updated: Sep 13,2017 10:27 PM

China will press ahead with supply-side structural reform with more efforts focusing on reining in excessive production capacity, reducing corporate costs and improving the environment for innovation.  

The decision was made at a State Council executive meeting chaired by Premier Li Keqiang on Sept 13, after hearing a report on the fourth round of the State Council’s nationwide inspection.  

The inspection, conducted by the State Council General Office in two phases between June and August, was aimed at ensuring that the tasks put forward by the central economic work conference and the Government Work Report are implemented in full.  

Cutting surplus production capacity will be prioritized, with special focus on weeding out substandard steel production. The government will further reduce corporate costs by applying standards and supervision to fees levied on enterprises by industry associations, chambers of commerce and various societies, in a major push to put an end to unregulated excessive charging practices at the very source.  

Unlawful charging practices will be handled according to the law. Whistle-blowing on wrongdoings will be encouraged to strengthen public supervision.  

“We need to give full play to inspection in its role of spurring implementation and development, to break the bottlenecks in the last mile of policy implementation, clearing all hurdles in the way of various policies,” Premier Li said.  

The inspection found that the ongoing supply-side structural reform is progressing in a steady manner as the economic structure continues to be optimized.  

The inspection also found a number of problems in different areas, including not enough efforts to cut excessive production capacity, deficiencies in business environment, and bottlenecks in the transformation of R&D findings to products.  

“The problems found in the inspection process should be addressed as early as possible, with results to be delivered for problems such as delays in shutting down surplus production capacity, excessive fees levied on enterprises, obstacles to foreign investment and long delays for approvals of some investment programs,” Premier Li said.  

The inspection report said that the government will further promote innovation-driven development, with an evaluation system to monitor the environment for innovation and entrepreneurship set to be established. The incentive mechanism for the commercialization of scientific and technological progress will be improved.  

The development of a business environment with a global edge will be prioritized to further promote private and foreign investment. The government will develop an evaluation mechanism for business environments, and conduct timely nationwide evaluations. 

The government will also work on the real estate transaction registration mechanism to further reduce red tape. Local authorities will be encouraged to ensure real-time data sharing between different information platforms.  

“Many good experiences and practices turn out to be cases for the reform to streamline administration, enhance compliance oversight, improve government services, and encourage innovation and entrepreneurship. Best practices need to be applied more extensively,” Premier Li said.  

“Government departments should study the feedbacks gathered. Address issues as soon and as much as possible, and provide greater support to local authorities, enterprises and the public.” 

The State Council launched its first round of nationwide inspections in 2014, followed by two inspections in 2015 and 2016, to keep implementation of economic and social work on schedule.