Jurisdiction - China
Reports and Analysis
China – Recent Reform In Reducing Administrative Approval Hurdles.
12 August, 2013

Though China has gone through six rounds of administrative approval reforms since 2001, various administrative approvals are required in many sectors, especially in private investment sectors. The cumbersome approval requirements have long been blamed to discourage investment in large-scale investment projects and to impose negative impact on the sustainable economic growth in China. Recently, the newly-formed central administration clearly indicated that it would take active steps to reduce the PRC government’s direct intervention in the economic activities by relaxing certain approval requirements, hoping to motivate the market players so as to boost the economic growth in China.

 

On 15 May 2013, the PRC State Council promulgated the “Decision of the State Council on Removing and Delegating the Power of Approval of a Batch of Items Requiring Administrative Approval and Other Issues” (Guo Fa [2013] No. 19) (the “Decision“). According to the Decision, the State Council has decided to either remove the administrative approval requirements or delegate its power of administrative approval in respect of 117 items. The Decision has become effective immediately after it was promulgated. The State Tax Administration and the Ministry of Culture have issued notices respectively to provide detailed rules for the implementation of the Decision. Several local governments at the provincial level such as Jilin, Hebei, Tianjin and Chongqing also released notices in this regard to follow up.

 

It is worth noting that under the Decision, some items that related to the fixed-asset investments of great significance or in the restricted areas but without the need of governmental funding will no longer require approvals by the PRC National Development and Reform Commission’s central or local offices. It is expected that such simplification of the approval formalities will attract more private investment in relevant industries.

 

On the other hand, there are only limited changes to the approval requirements in foreign investment field under the Decision. Approval requirements in respect of most foreign investment projects remain unchanged. Major changes include the following items:

 

  1. Examination and approval of foreign cooperation contracts on oil, natural gas and coal bed gas by the Ministry of Commerce, are removed;
  2. Examination and approval by the Ministry of Education of appointment of presidents or key executives of schools jointly established by Chinese parties and foreign parties or Hong Kong, Macao or Taiwan parties, are removed;
  3. Examination and approval by the Ministry of Culture of change of names, addresses, legal representatives or key persons in charge and commercial performance of joint and cooperative performance agencies established by Chinese investors with foreign or Twain investors, or of joint, cooperative and wholly-owned performance agencies established by Hong Kong or Macao investors in the Mainland, are removed;
  4. The registration of representative offices of foreign enterprises and the examination and approval of production and operation of foreign enterprises in China by the State Administration for Industry and Commerce, are delegated to the administrations for industry and commence at the provincial level; and
  5. Examination and approval by the Ministry of Culture of commercial performances by foreign literature and art organisations and artists at places other than song-and-dance entertainment venues in China, are delegated to the cultural authorities at the provincial level.

 

Further, the examination and approval by the Ministry of Transport of merger and acquisition of international shipping operators and of international ship agency services are removed and that shall also be applicable to the foreign invested shipping projects.

 

It is believed that the Decision is the first step of the administrative reform, as the new central administration has launched another round of administrative approval reforms and planned to cut down one-third of over 1,700 various administrative approving items. Looking forward, it is hoped that the approval requirements in the foreign investment field would be lessen and relaxed further, so as to attract more foreign investment to China.

 

 

For further information, please contact:

 

Frankie Cheung, Partner, Deacons

frankie.cheung@deacons.com.hk

 

Minning Wei, Deacons

minning.wei@deacons.com.hk

 

 

 

 

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