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Streamline Administration, Delegate Power, Strengthen Regulation and Improve Services to Deepen Administrative Reform and Transform Government Functions

Updated: May 12,2015 3:27 PM

Editor’s Note: Following is the full text of a national teleconference address by Premier Li Keqiang on May 12.

I. Deepening administrative reform and transforming government functions are strong driving forces behind, and an important guarantee for, development.

To transform government functions lies at the core of administrative reform. Economic reform is essentially about striking a balance between the government and the market by enabling the market to play a decisive role in resources allocation and the government to function better. The first task this government undertook after taking office is to advance administrative reform and transform government functions, with streamlining administration, delegating power and strengthening regulation being the first moves. For years, excess intervention and stifling supervision by the government over microeconomic activities, as well as too much emphasis on review and approval to the neglect of regulation, have sapped economic vitality, incurred high administrative costs and provided breeding grounds for corruption. To streamline administration, delegate power and strengthen regulation is a crucial step to address these acute problems. It tackles the crux of administrative and economic reform and what matters the most in improving the socialist market economy and enhancing social development. It is fair to say that this reform is right at the heart of all reforms with wide-ranging implications.

Over the past two years and more, notable results have been achieved in streamlining administration, delegating power and strengthening regulation. State Council agencies have canceled or delegated administrative approval power for 537 items, meeting two years ahead of schedule the pledged target of cutting the number of items requiring administrative approval by one-third within the term of this government. The number of investment projects subject to central government approval is down by 76 percent. All overseas investment projects, but for a few exceptional cases, can now proceed without administrative approval. For companies seeking registration, they can have their business licenses issued to them before getting administrative permits; 85 percent of the matters that once needed pre-registration approval now only require post-registration approval; with regard to capital registration, the paid-in capital scheme has been replaced with a pledged capital scheme; and annual business inspections have been canceled in favor of annual information disclosure. The number of qualification accreditation and performance appraisals has been cut dramatically. At the central government level, 420 administrative fees and government-managed funds have been abolished or reduced, relieving businesses and individuals of their financial burden by nearly 100 billion yuan ($16 billion) every year. While delegating power, the government has taken measures to strengthen regulation both during and after projects. Local governments at all levels are earnestly implementing the decisions and plans of the central government and stepping forward to take over, delegate or fulfill responsibilities accordingly. Some provinces have moved faster in this regard, canceling or delegating administrative approval power for over half or, in the highest case, 70 percent. In some provinces, non-administrative approval has even become something of the past.

These reform measures have achieved multiple purposes. They have effectively emancipated productivity, unleashed market vitality and social creativity, helped with efforts to stabilize growth, adjust economic structure and improve people’s livelihoods, and facilitated the government in building governance capacity and a cleaner government. New market players have mushroomed, reaching 12.93 million last year with a 45.9 percent increase in the number of newly registered businesses. Despite the economic slowdown, 13.22 million new jobs were created in cities and townships. In the first four months of this year, the number of newly registered businesses grew by 10,000 every day on average, and 4.45 million urban jobs were added. Over the last two years, faced with complicated domestic and external developments and growing downward pressure on the economy, we did not resort to massive short-term stimulus. Rather, we innovated the way we regulate the macro economy and deepened reform in all respects. As a result, the economy has continued to run within a reasonable range; records for job creation have been repeatedly set and broken; and the Chinese economy has remained among the fastest growing major economies in the world. This is largely attributable to the effect of reforms, including those to streamline administration and delegate power.

Reforms to streamline administration and delegate power have produced initial results, but they fall far short of what is expected for our people and what is needed by economic and social development. For one thing, the government, which still tends to overreach itself, has yet to relinquish power to the necessary extent. What’s more, measures aimed at streamlining administration and delegating power are yet to be implemented fully. While obstruction abounds in the middle of implementation, there are also problems with both the first and the last miles in implementation, so to speak. This is partly due to the absence of the right mindset and management modality. It also has something to do with resistance from local and departmental vested interests. Businesses and members of the public complain that quite a few matters still need review and approval, only in a different form. The once explicit requirement for government approval has morphed into an implicit requirement for approval from intermediaries with government background. There remain multitudes of documents to be submitted for review and approval and a raft of procedures to go through. For many, the process of getting something done remains lengthy and difficult, because agencies are in the habit of shifting responsibilities to each other, seals and certificates of one kind or another are still a must and there is a lot of toing and froing. Take the business registration reform, for example. It is true that companies are now able to obtain a business license without first acquiring an administrative permit. But even with a license in hand, many people keep running into all sorts of difficulties, and sometimes they cannot get their businesses up and running simply because of a single missing permit, whose requirement may sound rather ridiculous. As a matter of fact, this can happen to officials present at today’s conference as well as ordinary people. I believe you or your family members would encounter many of the above-mentioned problems in areas outside your purview. In the global context, according to the 2015 World Bank Doing Business Report, China ranks 90th out of 189 economies, though three places higher than last year. Too many restrictions like administrative approval are largely to blame. The ubiquitous requirement for approval, certificates, seals and documents of various types is a waste of time and energy for any individual and a source of fret and frustration. It consumes the human and material resources of a company and costs it market opportunities. It undermines the justice and equity of a society, dampens entrepreneurship and innovation and, worst of all, suppresses productivity. It impairs the image and authority of a government and affects public mood and opinion. If no steps are taken to remove these constraints on social productivity, the shared interests of the entire Chinese population will suffer and the process of the great national rejuvenation of China will be held up.

Under the new historical circumstances, reform measures such as streamlining administration and scaling back administrative power are no expediency but important steps that both deliver short-term benefits and meet long-term needs. To realize the dual objectives of maintaining a medium-to high-level growth rate and moving toward a medium-to high-level of development, we need to foster new growth drivers through such reform as streamlining administration and scaling back administrative power. With a fluid situation, the world economic recovery is an uphill journey. The Chinese economy has entered a state of “new normal” and a critical stage where we need to deal simultaneously with slower economic growth, difficult structural adjustments and the impacts of previous economic stimulus measures. In the first quarter this year, the economy faced many headwinds, but thanks to the targeted regulation measures we adopted since the second half of last year, the downward pressure has been somewhat offset. Now the economic performance is stable on the whole, with positive trends seen in some aspects. For instance, the surveyed unemployment rate dropped in April and industry has been rebounding. But still we are under considerable pressure in other aspects-for example investment is further decreasing. We must roll out more effective measures to sustain the upward momentum and resist the downward pressure. Fundamentally speaking, this requires the government to streamline administration and scale back its administrative power, ease restrictions and strengthen regulation where necessary, and improve services. We have both the confidence to keep the economic performance within a proper range and the capability to reach the main goals for this year and maintain a medium-high rate and level of growth for a fairly long time to come. We are confident because the Chinese economy has huge potential, resilience and ample space for readjustment. As long as we stay committed to deepening reform and strengthening the twin engines for economic growth, we will build up a stronger and longer-lasting force for development, and through hard efforts, bring about a new round of stable and enduring growth for the Chinese economy. Streamlining administration and scaling back administrative power is also essential for building a new system for an open economy. With profound adjustment in the global economic landscape and changing conditions of resource and production factors, our traditional competitive strengths are waning. Weak demand in the international market means heavy pressure for our imports and exports to grow. Therefore, we must speed up the building of an open economy and develop a network of high-standard free trade zones open to all other countries and an international and law-based business environment. We must explore the use of a management model based on pre-established national treatment and a negative list and foster and expand new competitive strengths in international cooperation. To achieve these, it is essential for the government to streamline administration and scale back administrative power, lift or exercise regulation where necessary and provide better services. I visited the four free trade zones, including the one in Shanghai. A major feature of them is streamlined administration and devolved administrative power that enable companies to get registered and investment projects to get started more quickly. To improve governance capacity, the government needs to deepen such reform as streamlining administration and scaling back administrative power. The government should withdraw from certain areas as needed so as to do a better job where its role is duly required, just as “cutting off extra branches and leaves helps to make the trunk stronger”, so to speak. Only when the government further delegates power where necessary, focuses on where regulation is needed, and provides adequate services, can it be possible for us to come up with new practices in governance, and better meet people’s will, promote development and facilitate social harmony.

To encourage all people to start their own business and make innovation, we need to streamline administration and scale back administrative power, and carry out reform that will remove obstacles and set a proper stage. History is created by the people, and a country’s prosperity and progress must be driven by its people’s creativity. By encouraging our people to become entrepreneurs and innovators, we hope to leverage their role as the masters of the country and their unlimited creativity so that our people can all participate in modernization and share in the benefits of reform and the fruits of development.

・ Encouraging startups and innovation will boost development, increase people’s wealth, promote social equity and strengthen the country. It is therefore an integral part in building socialism with Chinese characteristics. To encourage startups is conducive to creating more jobs, increasing people’s income and boosting domestic demand. At the same time, it enables people to live a more fulfilling life. It is also the surest way to realize common prosperity for our people. Redistribution alone is not enough to narrow the income gap. Primary distribution should be the main approach to enable more people to get rich. Reality on the ground already shows that where there is a more enabling business environment and a larger number of startups, the local economy will be more vibrant, with incomes higher and the wealth gap smaller. We now encourage the general public to make innovation. This is intended to foster a culture of innovation in our society. In such a society, we will have more fertile soil for innovation, a stronger push for innovation and a greater impact from innovation. To encourage startups and innovation by the public will enhance not only the “hard power” of the national economy but also the soft power of the country. It serves the fundamental interests of the public and meets the needs of each and every worker. A country where startups and innovation thrive must be one of promise, energy and progress.

・ Encouraging startups and innovation is not just relevant for individuals and newly established companies. In fact, well-established companies, including the bigger ones, should also keep their vitality and competitiveness through entrepreneurship and innovation. Just have a look at those successful companies with staying power. With no exception, they are the ones who keep up with the times and constantly innovate and forge ahead. Otherwise, they would have closed down a long time ago. In recent years some big companies have recognized the trend of Internet development and personalized consumption, and remade their management model. They have reshaped the traditional hierarchical management model into new platforms for their employees to pursue entrepreneurship and innovation. Such platforms are also open to the society. Employees can apply the novel ideas nurtured on such platforms in their own work or with a third party. As such, the company has thus become a big hub of resources for innovation. It can support more small and medium-sized companies, boast stronger capacity for innovation and can deliver more diverse products. There is a great deal that businesses can do in tapping their entrepreneurship and innovation.

・ We have unique strength in encouraging startups and innovation. China has over 1.3 billion people, including a 900-million-strong workforce. The average education level of our working-age population is 10 years, higher than the world average. The education level of our newly added workforce has reached 13 years, approaching the average of medium developed countries. There is huge untapped potential for human resources to be turned into human capital. Meanwhile, we also have over 70 million market entities, including over 18 million companies. Our people and market entities have a strong desire for entrepreneurship and innovation, but many have been held back by both tangible and invisible restrictions. We therefore must deepen reform to streamline administration and scale back administrative power. This will get rid of the obstacles and enable our people and market entities to travel light and grow stronger. We have mapped out reform plans for the Shanghai Pilot Free Trade Zone, which has attracted a large number of domestic entrepreneurs, financial companies and intermediaries, as well as foreign companies. Speedy progress is also being made in institutional reform in the free trade zones in Guangdong, Tianjin and Fujian. Experience gathered in these free trade zones must be timely applied to the rest of the country so that China, with an improved business environment, stands out as the most appealing destination for foreign investment.

The progress achieved in the past two years fully testifies to the effect of deepening reform through streamlining administration and delegating government power. In fact, we have learned about the importance of such reform from the course of China’s history, especially from the success of the reform and opening-up program over the past 37 years. The several-thousand-year-long Chinese civilization provides useful references. In this year’s Report on the Work of the Government, I quoted an old Chinese saying that “Good governance should be simple in its exercise” and stated that “power should not be used arbitrarily”. It was echoed by the deputies to the National People’s Congress. My inspiration comes from the ancient Book of Rites, which teaches us that “good governance, when exercised, brings the world together as one community” (See Chapter: The Conveyance of Rituals)”. And according to the Analects of Confucius, one should “hold the people in reverence and be simple in the measures he takes” when governing the people (see Chapter: Yong Ye). In other words, the job of the government is to keep the people’s interests at heart and hold itself accountable to the people at all times while minimizing its intervention and interference in people’s lives. The book then goes on to say that “it would be rather unacceptable to be simple both in the way that the government relates to the people and in the measures that it takes”. Put simply, if the government exercises power by treating the people as nothing more than just simple subjects, it would be irresponsible and even disrespectful of moral standards. Historically, the prosperity of a dynasty usually came from good simple governance, from freeing the people of levies and taxes to allow them to rest and recover, whereas the decline or demise of a dynasty was usually brought by doing just the opposite, as a bad government, as an old Chinese saying goes, “is more dreadful than a wild tiger”. The reform and opening-up process, which began following the Third Plenum of the 11th CPC Central Committee, has led China to remarkable progress. This is one recent example of how good governance, simple in exercise, has achieved the purpose of lifting restrictions and unleashing people’s ingenuity by way of reform and opening-up. For instance, rural land reform was conducted in the 1980s with the introduction of the household contract responsibility system, which gave farmers full autonomy in the operation of their land and quickly improved their livelihood. That being said, the delegation of power does not mean zero regulation, but rather better service on the basis of better regulation. China’s history over the past several thousand years as well as its 37 years of reform and opening-up shows that overregulation stifles progress. Only by removing restrictions can we spark creativity, unleash and expand productivity and steadily raise people’s living standards. To sum up, the key to good governance is respect for the people and the principle of simplicity in the exercise of government power.

Our overall goal of deepening administrative reform and transforming government functions is to streamline administration and delegate power, combine power delegation with effective oversight and improve service all in a coordinated way. Such a three-pronged approach will encourage mass entrepreneurship and innovation and mobilize the initiative at the central and local levels. It will help promote sustained and healthy economic and social development, cultivate a law-based, innovative, clean and service-oriented government at a faster pace to meet the requirement of the socialist market economy and socialism with Chinese characteristics, and eventually build up modern governance capacity. In this process, it is important to learn from the wisdom and fine traditions of our ancestors, such as the belief that “good governance should be simple in exercise”, and apply it in the modern-day context to let labor, knowledge, technology, managerial expertise and capital play their full part in invigorating the market, open up all sources of social wealth and give all members of the society an equal opportunity to discover and realize their full potential. By so doing, we will be able to build new engines of growth, create fresh prospects for social progress, unity and harmony and ensure that our nation will always be a place full of vitality and dynamism.

II. Push for greater depth in streamlining administration and delegating power to further unleash market vitality and public creativity

To deepen this reform takes both courage and wisdom. The reform has come to a stage where more deep-lying problems and vested interests will be targeted and the accustomed style of management will be changed. This is by no means an easy task. What makes it even more difficult is that as a self-imposed reform by the government to shed and restrain its own power, to streamline administration and delegate power is just like taking a knife to one’s own flesh. This is like sailing upstream against a strong headwind. We will get pushed back if no progress is made, or simply if progress is not made fast enough. To ensure national development and people’s well-being and sustained and sound economic and social development and that the economy continues to perform in a proper range, we must speed up this reform with utmost determination and courage. We must ensure the thoroughness of the reform without skipping or watering down any step or leaving any issue unaddressed. It is also important to design the reform measures properly and choose the approach and method wisely in light of specific circumstances to ensure smooth progress and greater effectiveness of the reform.

In deepening this reform, three things are vital. First, the reform must be a transparent process. Our policy must meet the needs of the people. It is the people who feel most deeply about the problems in our review and approval system and know best what needs to be changed and how reform should proceed. Instead of simply asking the people to accept government decisions, the government should give the people the right to decide. It is their needs and what they feel most strongly about that should be the main focus of the reform. And steps and pathways of the reform should be formulated accordingly. We need more targeted and detailed measures to remove the “choking points” in innovation, “stumbling blocks” in getting things done and “blind spots” in regulation and service. Second, the reform must be carried out in unison between the higher and lower levels of government. As an old Chinese saying goes, “An army wins that unites all its ranks around the same spirit”. In the context of this major reform, different levels of government must work closely together. For governments at higher levels, they need to listen to the suggestions from lower levels, the grassroots level in particular, to make the reform plan more feasible and operable. For governments at lower levels, while following through on the instructions from above, it is important to come up with concrete implementation steps suited to the actual circumstances. Except for matters concerning major public interests such as national security, environmental security and public health, the priority should be to reduce matters requiring approval. In cases where power delegation is duly required, different departments need to check with each other to ensure that the entire approval chain is delegated. No department should cling to the power or simply pass on the responsibility without giving up the final say. Otherwise, any single department that refuses to delegate its power could completely stall a business startup or investment program. That is why there must be a deadline for any necessary approval, be it before or after registration. The departments must link up their approval systems and make relevant information known to the public. To which level should power be delegated shall be determined on the bas is of the due responsibilities of local governments instead of passing the buck and simply leaving it to the grassroots-level government which may not be capable of handling the delegated matters. Third, it is up to the public to evaluate the effectiveness of the reform. Ultimately, it is the level of satisfaction of the people and companies and the actual results that should serve as the criteria for our reform efforts. The result should be measured not only by how hard we work or how many approval items we have abolished or delegated, but rather by if it is easier for our people and businesses to get things done with less time, money and energy.

Solid efforts should be made to promote streamlined administration and delegate power this year with clearly-set priorities and deadlines.

(I) Cut down still more review and approval items to earnestly lower the threshold to employment, entrepreneurship and innovation. By the end of May, we will finish sorting out all items requiring non-governmental review and approval by the State Council departments and will thereafter revoke such review and approval categories. By the end of the year, we will further revoke some items greater in “value” to society, such as administrative review and approval, review and preliminary approval of investment projects, qualification and credential review and certification as well as making performance evaluations, reaching standards, and awarding commendations. By removing by the end of the year over 200 administrative review and approval items as previously designated by the central government for implementation by local governments, we will open greater space for local governments to delegate power.

(II) Cut down still more review and approval items by intermediaries to truly dismantle the so-called “revolving doors” and “glass doors”. We should speed up efforts to formulate and announce a list of intermediary services of administrative review and approval by State Council departments while simplifying procedures for intermediary evaluations. We should completely de-link the intermediaries from administrative review and approval agencies so as to cut off the chain of interests between the two. Obviously, China’s intermediary services fall far short of those in developed countries, an area that promises great potential as a new growth point. Sorting out and regulating intermediary services should not result in restricting their development. Rather, it is aimed at promoting their better and faster development by creating a level playing field and strengthening their functions of services.

(III) Cut down still more red tape in the review and approval process to help the companies and individuals involved. By the end of September, State Council departments should simplify administrative review and approval procedures, reducing the preliminary procedures and making relevant deadlines public, promote integrated and online review and approval, and effectively address problems such as overly complicated and time-consuming procedures and arbitrary conduct in work. We should speed up the establishment of a nationwide information-sharing online platform for the review and oversight of investment projects. It will start the operation of connecting all central government departments by the end of June, and of connecting the central and local governments by the end of the year.

(IV) Cut down still more registration procedures and other formalities required of enterprises to clear the way for entrepreneurship and innovation. To further facilitate business registration, we will, by the end of the year, complete the three-in-one reform by integrating the business license, certificate of organization codes and certificate of taxation registration, and introduce a new social credit code to the enterprises. This is an important test to our ability to break the chain of departmental interests and form a unified nationwide information platform. I have found out from inspection tours that the new social credit code has been in use in some places, but has yet to be recognized by other places. Though still difficult to proceed, we should redouble efforts to popularize the new social credit code across the country, so as to put in place a unified, open and transparent national marketplace for all to join in fair competition. We should continue to innovate the registration modality, allowing two or more companies to register at the same address and one company to set up branches while being registered just once. The practice of applying for permits after receiving the license, which is unnecessary and not required by law, will be removed. We should deepen business system reform to ensure sustained growth of new companies along with their business dynamism, thus laying a good foundation for a steadily growing economy and employment.

(V) Cut down still more unlawful, unregulated and unreasonable fees to truly lessen the burden on companies and individuals. The collection of fees must be regulated. Since last year, we have adopted a number of targeted regulation measures, including tax cuts for small and micro businesses and for agriculture, rural areas and farmers, targeted reduction of the bank required reserve ratio, and asymmetrical reduction of interest rates, thus sending a positive signal to the market. These measures have proven effective. But if the fees remain uncut, then the benefit of measures, no matter how numerous we adopt, would be undermined or even canceled out. By the end of May, we should put in place the special plan to clear up and regulate fees. And by the end of the year, we will make sure that all the fees and funds that have been created and approved without proper authorization and legal basis be completely revoked and practices of arbitrarily increasing or expanding fees be stopped. Administrative fees for ordinary public services or general management functions offered by the government, government-run funds no longer suited for economic development, and intermediary fees for administrative review and approval without legal basis will all be eliminated. And fees that exceed the cost of services and funds with a considerable surplus balance should see their contributions lowered.

While reducing and delegating powers, the government should step up the management and restriction of its powers through a strong system, introducing rule of law, enhancing law-based administration, and making itself a law-based government. Honoring the principle that functions and powers are set by law, we should set up the “three lists” quickly, clearly defining the boundary of power and responsibility between the government on the one hand and the market, enterprise and society on the other. With the list of power, the government will know clearly what it can do, and what it cannot do when it comes to things outside the mandate of law. With the list of responsibilities, the government will know clearly how it should manage the market, and what it must do as required by law. And with the negative list, companies will know clearly the restrictions they are subjected to, and what they can do outside the confines of law. With the three lists in place, it is easier for us to control the “visible hand” in accordance with law, leverage the “invisible hand”, and block the “rent-seeking hand”. Within this year, we should basically complete the publication of the power list for the government departments at the provincial level, and conduct studies and pilot programs on the power list and responsibility list for the State Council departments.

III. Strive for dynamic and orderly market and society by innovating and strengthening governance

Deepening administrative reform and transforming government functions require not only the removal and delegating of powers, but also improvement and strengthening of governance, with greater government efficiency and stronger government capacity for comprehensively performing duties in accordance with law, so as to ensure both dynamism and order in the market and society, and deliver sustained and healthy economic growth and just and equitable society.

The pressing task now is to strengthen market regulation, and create a level playing field for market entities of various types. Currently, China’s market economy is far from well-regulated. A large number of new market players have emerged after the reform of the business system. Should market regulation fall short, market disorder could intensify, and the distorted effect of the “bad money driving out the good” would get amplified, and the development of honest and the new market players would be adversely affected. I was told in my local field trips by many, including business people from Taiwan and foreign countries, that companies alone can not resolve such market irregularities as IPR infringements, cheating, swindling and counterfeiting. If the government gets them under control, companies would be relieved of their “pain in the heart”. Therefore, after significantly reducing the number of review and approval items, the government should get to the ongoing and ex-post oversight of the market. This represents a major shift of government management style which is harder and more challenging. Governments at all levels, as well as their employees, should adapt themselves to such a shift and earnestly perform their duties of governance.

We need to improve the supervision approach to place more emphasis on the rule of law, fairness and accountability. The current practice of market supervision entails inspection of too many kinds without clearly defined rules, adding burdens to enterprises and creating room for rent seeking. On the other hand, market behaviors that should be subject to supervision by the government are left in benign neglect. The right approach to supervision requires both strictness and simplicity. The government should minimize intervention in people’s lives and put in place a sound legal framework and proper and effective rules, procedures and standards for market supervision and publicize them fully so that market players will know where the line is drawn and carefully observe it. By so doing, the discretionary power of regulators will be slashed. Equally important, the government must carry out supervision in accordance with the law, maintain and safeguard the market order for fair competition. To use a sports metaphor, the government should be a good “referee”-leaving those well-behaved players alone while giving a timely yellow-card warning for minor fouls or a prompt red card for serious foul play. Needless to say, a referee should perform his duty faithfully and enforce the rules in a fair and just manner instead of being negligent or engaging in match-fixing. Regulators must be subject to supervision as well. Relevant information should be made public and a well-defined accountability system for supervision must be enforced.

We need to innovate supervision mechanisms and explore new ways to make supervision more effective. After active experiment over the past two years, local governments have gathered plenty of good experience and practices. Continuous efforts must be made to advance innovation in supervision. First, we need to put in place an integrated system for supervision and law enforcement. We should push ahead the building of a unified supervision platform that covers the entire scope of supervision by all government departments involved. Meanwhile, we need to consolidate administrative law enforcement teams to conduct cross-department and cross-sector law enforcement. The responsibilities of different law enforcement agencies can be merged into one to form synergy in supervision and law enforcement and avoid either overlapping responsibilities or blank spots. The result of supervision and law enforcement should be made public and put on record. After all, the most effective way to deal with unfair supervision and law enforcement is to expose them in the sunlight. Second, we will carry out more ad hoc inspections. In some places and sectors, enterprises and regulators involved in inspections are now randomly selected through separate lotteries conducted on the same platform. We will popularize such practices across the country as they both increase pressure on the enterprises and narrow the space for rent seeking. Third, we will advance “smart” supervision. We should actively employ big data, cloud computing, the Internet of Things and other information technology to explore an “Internet Plus supervision” model. We should speed up information sharing and connectivity among departments at different levels to remove “isolated islands of information”, so to speak. We will put in place a unified social credit system, an information disclosure and credit filing system, and an integrated punishment and blacklist mechanism so that one act of dishonest behavior will result in restrictions at every turn. Fourth, we need to strengthen public supervision. We need to have unimpeded channels for public complaints and tip-offs. We should give sufficient incentives to whistle-blowers and keep their identity confidential. Enterprises should bear the primary responsibility in the mutual supervision mechanism that can trace problems to the source. Industry self-regulation and peer review should be strengthened. Media scrutiny should be encouraged. All these efforts will help weave a tight net of supervision where nothing can escape public attention.

IV. Improve government services to better meet the needs of the people and that of economic and social development

It falls upon the government to create conditions for its people to lead a decent life. Despite the tremendous efforts over the years made by governments at all levels, public goods and services remain inadequate. Promptly addressing this challenge will help bring about notable improvement in the capacity and quality of government services and an increase in effective investment, which will help counter the downward pressure on the economy. This calls for deepening reform, such as further streamlining administration and delegating power to remove obstacles and better leverage the role of market forces. The result of the reform can be measured by the rate of increase in public goods and services. By providing sufficient public goods and quality, efficient public services, we want to make entrepreneurship and innovation easier, economic development smoother, our people happier and our society more caring, harmonious, cohesive and dynamic.

(I) We will provide all-round services for mass entrepreneurship and innovation. This will help create jobs, which is also the aim of promoting stable growth. First, we need to strengthen policy support. We are looking at a series of policy measures in support of entrepreneurship and innovation with a focus on small and micro businesses on top of cutting taxes, slashing fees and reducing corporate burdens. We will provide support in terms of rent, office space, taxes and fees to various incubators such as maker-spaces and Innovation Works. We will make government funds available to leverage private input through discounts, subsidies and venture capital funds. We will improve investment and financing mechanisms, develop venture capital, angel investment and other forms of investment, explore new business models and take multi-pronged steps to help entrepreneurs meet their financial needs. Second, we will put in place a platform for comprehensive services on which all the needs for entrepreneurship and innovation will be provided for. We will step up policy, legal and consulting services, better protect intellectual property rights and provide guidance to employment and entrepreneurship for college graduates and vocational training for rural migrant workers. Some of these services can be provided by the government directly, some can be purchased from specialized agencies and some others require the active involvement of intermediaries. Third, we will provide accessible and efficient services. It is already demanding for people to start up companies and make innovations. Governments at all levels and their staff must put themselves in the shoes of entrepreneurs and innovators, provide more tailor-made, thoughtful and speedy services with streamlined procedures. We will continue to offer one-window, one-stop and one-package services at government service centers, set up clearly defined procedures and standards, and shorten the approval time.

(II) We will provide fair and accessible public services to the people. Providing more public goods and services is not the one-man show of the government. We should introduce institutional innovation, use all the possible support of the society and make sure there is sound planning, standards, competition and stronger oversight. Enterprises and public organizations should be given the responsibility in whatever areas they have the interest and expertise, by way of authorization, contracting and purchase. For those services where government involvement is truly needed, there should be public-private partnership. This should also be applied whenever possible to the provision of basic public services. The government should try its best not to add staff or institutions and strive to do more with less. This will be conducive to the formation of a new public services mechanism and to the growth of privately-run service sectors in education, healthcare and old-age care. While working hard to provide sufficient public services, we should improve the fairness and accessibility of such services. We need to innovate the ways of delivering services to bring the greatest possible convenience and benefit to the people. It will be ideal if some services can be handled online, or by proxy or delivered to the doorstep which saves people the time of visiting government bureaus. When people do need to go to government bureaus, they should be notified of all the requirements beforehand and be able to complete the procedure with one or two visits. As for the various kinds of “certificates” people are asked to produce, they should be kept at a minimum, and they should be standardized and combined whenever possible. Those that are truly necessary should be verified through information sharing and coordination between government departments. Government at all levels and their staff must be committed to providing the greatest convenience for the people even if it means more work for them.

(III) We will make sure the government fulfills its responsibility to provide subsistence assistance for all. China is still a developing country with more than 70 million people living on the basic living allowances and roughly the same number of people living below the poverty line. Though we have established a social security system that covers the whole population, the level of welfare provided remains low, and many local governments have to struggle with a fiscal crunch. Yet no difficulty should weaken our resolve to meet the basic needs of those people in poverty. When subsistence is guaranteed, business starters, especially the young people, will be free to pursue their ambitions and have something to fall back on even if they fail. We should pay more attention to the employment, social welfare, education, healthcare and old-age needs of groups in difficulty and accelerate the transformation of urban rundown areas and dilapidated houses in rural areas. Nonetheless, it should be pointed out that efforts to provide basic public services and improve people’s livelihood should be based on reality and commensurate with the level of economic and social development in our country.

V. Strengthen planning and leadership and ensure sound implementation of all reform measures

To deepen administrative system reform and transform government functions is a profound revolution that covers extensive areas and involves many difficulties. We must strengthen leadership and planning to move the reform forward in an active yet prudent manner.

First, strengthen mechanisms and clarify responsibilities. The State Council will continue to focus on streamlining administration, delegating more powers to lower-level governments and society, improving regulation and optimizing services. All regions and departments must also set up their corresponding leadership and working mechanisms where the principal leaders should take charge and make timely decisions on major issues in the reform. All reform items should be based on detailed division of tasks and duties, timetables, roadmaps and written pledges of responsibility. The reform will touch on the government’s own interests, and we must have the courage to cut our own benefits to give them to the people, to make our society a more prosperous place.

Second, coordinate actions and boldly experiment with reforms. To streamline administration, delegate more powers to lower-level government and society, improve regulation and optimize services is a systematic project that needs to be guided by holistic planning and advanced as a whole. All regions and departments must have a firm understanding of the overall picture and implement the decisions to the letter to make sure that all directives are executed without fail and there is consistency in our actions across the country. For any reform decisions taken by the State Council, related documents and supporting measures should be introduced as quickly as possible without procrastination. A basic experience we gained in reform and opening-up is to respect the community and people’s creativity. Many major reform measures started at the local or regional level and were then spread nationwide. In our reform such as administrative streamlining and power delegation, ample space is left for the regions. All regions should be bold in their exploration and innovation in light of their own conditions and the requirements and principles laid down by the State Council to take the lead in reform. At the same time, they should learn from other region’s good experience and practices.

Third, be proactive and conscientious. Our civil service is professional, responsible and hard-working on the whole. The achievements of reform and opening-up have been the results of the common efforts by government officials at all levels and the people. In the future, we will still rely on our officials to lead the people in advancing reform and development. With regard to nonfeasance and perfunctoriness that do exist among some officials, we need to enhance ideological education to help them adapt to the new situation created by administration streamlining, power delegation, regulation improvement and service optimization, and guide them to make new achievements in promoting prosperity and stability in their own regions. At the same time, we must create stronger incentives and disincentives to encourage officials at all levels to be proactive and conscientious in their work. Government staff, civil servants at the community level in particular, have a very heavy workload and their income is not high. While resolutely barring the “back door” and addressing issues of civil servants making illegal gains with their power, we should also open the “front door” to establish a mechanism for regular salary increases so that civil servants’ income will be raised in tandem with economic development and their legitimate welfare and dignity will be ensured. Last year, the State Council introduced policies on improving the salary and pension insurance system for public institutions, and the salary adjustment in all regions must be implemented by the end of June.

Fourth, greater oversight and strong implementation. All regions and departments should incorporate administrative streamlining, power delegation, regulation improvement and service optimization into their performance evaluation system and improve the assessment mechanism. There should be greater and innovative ways of oversight and inspection that incorporate third-party and public evaluation. Good experience should be disseminated in a timely way and issues discovered should be solved without delay. Failure to implement will be subject to accountability. All this will help to ensure solid implementation of all reform measures. In the coming months, the State Council will conduct a major inspection of government departments and local regions, to make sure that measures to delegate power, improve regulation and optimize services are implemented throughout from the “first mile” to the “last mile”. This will be conducive to strengthening the efficacy of our policies to stabilize growth, advance reform, adjust structure and benefit the people.

Fifth, promote steady progress of reform in accordance with law. The law is an instrument of paramount importance in national governance and good laws are the precondition for good governance. Reforms such as administrative streamlining and power delegation must be promoted on the basis of the rule of law and major reforms should have solid legal ground. At the same time, laws and regulations should also meet the demand of reforms and be adjusted and improved in a timely way to promote order and vitality at the same time. When delegating powers, relevant departments need to propose accompanying revisions to laws. The revision and legislation process should subject to close scrutiny to prevent the legalization of departmental interests. Extra-judicial extension of powers will be strictly prohibited to prevent new expansion of government powers. All the relevant regulations should be overhauled promptly at the requirement of the State Council and all those that have no legal basis or detrimental to the people’s lawful interests are to be abolished or revised.