China will soon release a national regulation on bettering the country’s business environment. This is to establish a basic framework of norms for a business environment that treats all market players-domestic and foreign-as equals, and to provide institutional safeguards, in the form of government regulation, for investment and business operation by all types of market players.
The draft regulation was adopted at the State Council’s executive meeting chaired by Premier Li Keqiang on Oct 8. In light of the actual needs of market players, the new regulation focuses on transforming government functions, draws upon advanced international standards, and seeks to codify the experience and practices proved effective from past reforms.
Improving China’s business environment has been high on the government’s agenda. General Secretary Xi Jinping said the rule of law helps create the best business climate. He stressed the need to improve the investment and market environment, and reduce the cost of market operations to foster a stable, fair, transparent and predictable business environment. Premier Li Keqiang emphasized the imperative to take more solid measures to shore up any weak areas to further boost market vitality.
“Introducing this regulation now is crucial to consolidating our achievements in the reform of government functions in recent years. It is also a key measure for tackling the downward economic pressure and attracting more foreign investment,” Premier Li said.
China has seen its business environment visibly improved in recent years thanks to the reform of regulatory streamlining and government service upgrading. In 2018, China’s global rankings moved up significantly in the World Bank’s ease of doing business report and similar surveys by other global institutions.
The new regulation also features greater intensity in empowering market players. It stipulates the need to consistently ease market access, including applying a unified national negative list on market access, further deepening the reform of decoupling business licenses from operation permits, and simplifying procedures for opening or canceling a business. Local governments are required to make public the time required for applying for permits and certificates, opening bank accounts, and applying for electricity use, and other items related to starting a new business. Explanations need to be made to the public for cases that are not completed within the stated time period.
Real-estate registration and transactions, as well as tax payments, shall be done in one stop.
The new regulation also highlights the importance of making government services more efficient, with administrative licensing and reviews further simplified. The practice of notification commitment will be put in place for those review and certification items that need to be kept. Strict law-based deliberations and approval procedures must be put in place for setting any new administrative review and licensing items, according to the new regulation.
Refined and innovative approaches in oversight and law enforcement are also underscored. The practice of randomly selecting inspectors to inspect randomly selected entities and prompt release of results will be applied to all areas except for those closely related to public safety and health. The Internet Plus Oversight model will be promoted, and a prudent yet accommodating regulatory approach will be applied to emerging industries.
“Clear and solid requirements must be made in terms of the procedures of starting businesses, decoupling business licenses from operation permits, administrative licensing, market entry and exit, and effective oversight and better government services. All this will send out positive signals to the market, and contribute to a good image internationally,” Premier Li said.
The protection of market players is also highlighted in the new regulation. It requires that the right of market players to independent operations and their personal and property safety be protected, all types of market players have equal access to factors of production and national policy incentives, and institutional arrangements including a sound mechanism of punitive compensation for intellectual property infringement, be put in place.
The principle of transparency in government services is underlined in the new regulation. Government services should be enjoyed with unified criteria by all types of market players on an equal basis. Views of market players and industrial associations should be fully heeded when making regulations, ordinances and normative documents that are closely related to business production and operation. It was made clear that without supporting provisions in laws and regulations, administrative normative documents should not undermine the rights and interests, or increase the obligations of, market players.
“We must continue to pay great attention to deepen the reform of government functions as we build a world-class, market-oriented business environment governed by a sound legal system. For a developing country like China, in addition to using fiscal and monetary policies, a more enabling business environment is all the more critical for boosting market vitality,” Premier Li said.
Responsibility tracking and investigation will be more strictly exercised. Any arbitrary acts and law-breaking behavior made by government staff and officials, as well as arbitrary surcharges from public institutions, will be seriously dealt with.
“The reform of government functions is an important measure of our effort to improve the business environment. There is still much that we can do. Our efforts to transform government functions and exercise law-based governance in an open and transparent way conform to the direction of reform and opening-up,” Premier Li said. “The delegation of government powers must help deliver greater efficiency, while the improvement of government oversight must help ensure fairness.”
