How promis­ing is the cut­ting of red tape?

China Daily (Hong Kong) - - VIEWS -

The govern­ment made amaz­ing achieve­ments this year. At a press con­fer­ence dur­ing this year’s ses­sion of the Na­tional Peo­ple’s Congress, the top leg­is­la­ture, in March, Premier Li Ke­qiang said the govern­ment had al­ready abol­ished one-third of the un­nec­es­sary ad­min­is­tra­tive li­censes and will re­duce them by half by the end of the year.

That prom­ise has been ful­filled. By early De­cem­ber, the State Coun­cil, China’s Cabi­net, had can­celed 222 un­nec­es­sary vo­ca­tional li­censes for em­ploy­ees and more than 50 ap­proval pro­ce­dures for in­vest­ment pro­grams.

The im­por­tance of sim­pli­fy­ing ad­min­is­tra­tive pro­ce­dures can nev- er be over­es­ti­mated. Com­pli­cated ad­min­is­tra­tive pro­ce­dures not only im­pose ad­di­tional eco­nomic costs on en­ter­prises, they also force en­ter­prises to spend more time to com­plete them. Just to open a small shop you have to pur­chase dozens of stamps. This time- and en­er­gy­con­sum­ing pro­ce­dure is not con­ducive to do­ing busi­ness.

Un­like 2014 and 2015, the ad­min­is­tra­tive pro­ce­dure re­form this year fo­cused on re­duc­ing the re­quire­ments for in­vest­ment pro­grams, which was nec­es­sary be­cause en­ter­prises need a lower thresh­old for in­vest­ment so as to have more vi­tal­ity.

But the re­duc­tion of re­quire­ments al­lowed in­vestors to save only time, not eco­nomic costs. The tax bur­den on do­mes­tic en­ter­prises is still quite high. For ex­am­ple, Cao De­wang who runs a glass man­u­fac­tur­ing busi­ness went on­line to com­plain about the bur­den of heavy tax on en­ter­prises. Cao’s video has been widely cir­cu­lated on the in­ter­net and many en­trepreneurs have voiced sim­i­lar com­plaints.

So once the ad­min­is­tra­tive pro­ce­dures are sim­pli­fied, the govern­ment should deepen the re­form by cut­ting taxes to re­duce the eco­nomic costs of en­ter­prises, which in turn will boost the econ­omy.

Eas­ing the tax bur­den of en­ter­prises is likely to be fraught with dif­fi­cul­ties, be­cause it will chal­lenge some vested in­ter­ests. So im­ple- ment­ing the re­form will be a test for the au­thor­i­ties.

Only when the au­thor­i­ties abol­ish the ma­jor­ity of the un­nec­es­sary ad­min­is­tra­tive pro­ce­dures and fees, and ease the tax bur­den can en­ter­prises save both time and eco­nomic costs, and en­joy the div­i­dends of the re­form.

Next year, the higher au­thor­i­ties have to take sev­eral mea­sures to ex­pe­dite the pace of the re­form. To be­gin with, they should in­struct lo­cal gov­ern­ments to fol­low in the foot­steps of the cen­tral min­istries and de­part­ments, which have been sim­pli­fy­ing their ad­min­is­tra­tive pro­ce­dures for years. Some pro­vin­cial- and city-level gov­ern­ments, too, have been do­ing the same. But since lower-level gov­ern­ments deal more di­rectly with the peo­ple than the higher ones, the ad­min­is­tra­tive pro­ce­dure re­form will be a com­pre­hen­sive suc­cess only when low- er-level gov­ern­ments fol­low the cen­tral govern­ment’s rules.

And since some of­fi­cials could lose their pow­ers be­cause of the re­form, they are re­luc­tant to im­ple­ment it and thus curb­ing eco­nomic growth and caus­ing in­con­ve­nience to the peo­ple. Be­sides, some lo­cal of­fi­cials idle away their work­ing hours, slow­ing down the gov­er­nance re­form. The cen­tral lead­er­ship should take steps to re­move th­ese ob­sta­cles by more strictly reg­u­lat­ing civil ser­vants.

The au­thor is a pro­fes­sor of public gov­er­nance at Pek­ing Univer­sity. The ar­ti­cle is an ex­cerpt from his in­ter­view with China Daily’s Zhang Zhoux­i­ang.

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