18 January 2020

POLICY WATCH: Beijing loosens grip on enterprises

The central government is further retreating from having a direct role in the economy to give enterprises a freer hand in pursuing business development as it relies more on market forces to drive economic transformation.

The State Council, the nation’s cabinet, has revised a list of investment projects that will no longer require government approval and eased administrative procedures to reduce government intervention in the market, according to a statement posted on the central government website on Sept 25.

The current list, which was drawn up in 2004, is no longer adequate to address current economic, scientific and technological needs, the statement said, adding that revisions are necessary to enable the market to play a more important role in transforming the economic structure.

After the amendments, several projects which have been in the market for a long time will no longer seek central government approval but only need to submit reports to relevant authorities.

Among the first batch of projects to be affected by the amendments is gas power generation. Administrative approvals have been either cut or delegated to lower levels. Entry requirements for foreign investors in this sector have also been relaxed, according to the statement.

The State Council has exempted 75 other items from central government approval, taking the total number to 221 since the country’s new leadership assumed office in March this year.

Enterprises covered by the exemptions can now respond to market needs and developments in a more efficient way, enabling them to rely more on their business acumen rather than seek government intervention to resolve market issues.

Reducing state approvals and intervention will not only give enterprises more say in their own investments but also allow the government to focus on the bigger picture.

The arrangement will encourage fair competition, avoid inefficient business operations and reduce idle capacity, the government said.

In August, the State Council announced that strict standards must be used in setting new approval requirements for products, investments by enterprises and qualification processes, while restricting authorities from setting requirements in industries where the market can properly govern itself.

The central government started the first round of moves to streamline administrative procedures for investment, production and operation in April.

– Contact the reporter at [email protected]



    EJ Insight writer