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China to further transform government functions and invigorate market vitality

Zhang Yue
Updated: Aug 26,2020 11:01 PM

China will work to ensure that opening a business will be processed entirely online before the end of the year, as part of efforts to further transform government functions with a view to preserving and reinvigorating market entities, the State Council’s executive meeting chaired by Premier Li Keqiang decided on Aug 26.

The Chinese government places great importance on deepening reform of the business system. General Secretary Xi Jinping underlined the importance of deepening business system reform to break administrative monopolies, prevent market monopolies, ease market access restrictions in the service sector, and improve the institutions for market oversight. Premier Li Keqiang stressed the need to advance business system reform to remove institutional hurdles to entrepreneurship and innovation, further spur market vitality and expand employment.

Figures from the State Administration for Market Regulation showed that in 2019, as many as 20,000 new businesses were registered in China on an average day. By the end of July this year, 132 million market entities were registered nationwide, up by 6.7 percent from the end of last year.

“The reform of transforming government functions and delivering the fiscal and financial relief policies must progress in parallel,” Premier Li said. “So far, the special transfer payment mechanism that directly channels funding support to primary-level governments has played a crucial role. In the meantime, we must continue to lower the market threshold to stimulate market vitality and public creativity.”

It was decided at the meeting on Aug 26 that business opening will be processed entirely online before the end of the year. Separate registration of corporate domicile and business premise will be piloted, and a company may register more than one business premise.

“We need to do everything we can to help market entities survive and thrive. If the 100 million-plus businesses could keep running, we will be able to meet the goal of creating 9 million new urban jobs this year,” Premier Li said.

To ease business operations, expand opening-up and support agriculture and rural development, administrative licensing over 49 items with overlapping permit requirements will be canceled, and the approval authority over four items will be delegated to the provincial level. Where law revision is needed, these new measures will be implemented after the Standing Committee of the National People’s Congress approves the proposed law revisions.

“The government departments concerned must put the larger picture before departmental interests. More needs to be done to trim the approval requirements, stepping up oversight alongside proper deregulation. While canceling the approval requirements or delegating approval authority, responsible departments must ensure sound compliance oversight,” Premier Li added.

“It takes more than monetary input for the Chinese economy to grow. The reform of government functions could further bring out the ingenuity and industry of the Chinese people, and enhance the efficacy of government oversight and services. This is a reform that could lead to greater fairness and efficiency.”