REFORM OF FINANCING & INVESTMENT SYSTEM Nation plans to further liberalize business environment to create a fairer and more enhanced rule-based market

Private firms are happy to see that investment restrictions are to be further lifted, as China aims for further steps in reforming its investment and financing system, encouraging social investment participation with more compliant requirements, including for project planning and fire prevention.

The State Council’s executive meeting, chaired by PremierLiKeqiangonJuly5,decidedtofurtherliftrestrictions on private investors, while more measures to simplify project approvals are in the pipeline.

The meeting also urged that more high-quality assets be usedinPublicPrivatePartnerships(PPP)toattractagreater number of social investors, as well as using returns in such projectsfornewprogramsininfrastructure,publicservices, poverty alleviation, and the Made in China 2025 strategy, according to a statement after the meeting.

Chen Bing, head of a juice production company based in Suzhou, Jiangsu province, was excited to learn of the latest development. The 34-year-old is planning to open another juice production plant in another city in Jiangsu, but was hesitant as opening any new plants means getting a raft of approvals for fire prevention equipment and sanitary facilities.

“I am just afraid that it will take a very long time before the plant really starts operations, which may change our profit outlook,” he said.

Xiao,aconstructiondesignengineerwhohasbeenworking with the city planning department of Beijing for over a decade and requested that her full name not be used, said she appreciated the lifting of restrictions. “On some occasions, it can take a long time and it is complicated for an investor to meet the demands on fire prevention and project planning when building a new factory plant.”

One project, she recalled, in particular was a private company that manufactures sewage treatment facilities in Beijing.Theproject,whichstartedconstructionlastyear,failed tomeetfireprotectionrequirementsduringconstruction.It took the company more than a year to make adjustments and start operations.

Xiao said that while requirements regarding fire control are important, the current requirements and restrictions are sometimes too complicated, and efforts in meeting such requirements may lead to delays in operations and a loss of business opportunities for private investors.

Wen Bin, chief economist at China Minsheng Bank, said given the fact that China is transforming to a more consumption-driven economy from one driven by investment and exports, steady growth in investment is still important, as it helps the economy to grow in a proper range, while steadiness in social investment helps to build positive expectations for the economy.

“Consumption contributed to about 64.6 percent of China’s economy in the past year, and services have surpassed manufacturing in terms of contribution to growth, signalingthatChinaisperformingwellinitssupply-sidestructural reform. But investment still needs to be consolidated in maintaining steady economic growth, especially in areas of infrastructure and the real economy,” Wen said.

There is still a huge potential to be tapped for PPP programs, Wen said.

There are about 12,000 PPP projects across the country, Wensaid,butmanysuchprojectsarenotcomposedofhighquality assets from the government side, making them less attractive to private investors.

“Some PPP projects in areas such as irrigation and environmental protection may lead to long-term operations, slow payback and low profits, but they will bring goods and enhance people’s livelihood in the long term,” Wen said. “The government must use a variety of financing tools to encourage private investors to participate, while making them more inviting to social capital, large or small, to accelerate more of these projects.”

In recent years, China has streamlined administrative reviews, focusing more on compliance oversight to make the business environment easier for private and foreign investors.

China’s private investment grew at 7.7 percent for the first quarter in 2017, a 2 percentage-point increase compared with the same period last year.

Premier Li has stressed a number of times that investment plays a vital role in boosting demand and consolidating employment.

Since 2013, the number of projects requiring approval from the central government has reduced by 90 percent, while the time required from approval being granted has also been reduced by 90 percent in some places, according to government statistics.

The premier also said when meeting with a group of economists and entrepreneurs on Thursday that aggregate demand will be appropriately expanded while effective investment, especially private investment, should be boosted to enhance the driving force that domestic consumption has provided.

More policy and market regulation innovations are in the pipeline to create a fairer and more enhanced rulebased market environment, as decided at the executive meeting on July 5. The upcoming measures will create a level playing field for investors from home and abroad, boosting steady private investment growth, according to the meeting.

Transfer of housing providents

A platform was put into operation on July 1 for residents to transfer their housing provident funds nationwide. This was a change from the previously separated systems in provinces, municipalities and autonomous regions that led to inconvenience when people moved from one place to another.

On the new platform, people can transfer housing provident funds from one region to another, while provincial-level regions can share information on deposits and withdrawals of such funds as well as keep records of housing loans.

By doing this, the rights of residents will be ensured as they will get housing fund loans at lower interest rates than commercial loans. The platform also helps migrant workers and other newly settled urban residents solve their housing problems.

Boosting the sharing economy

A guideline on promoting the sharing economy, promulgated by the National Development and Reform Commission and seven other ministries, said the government will encourage innovations in the sharing economy while regulating the sector in an efficient manner.

More sophisticated regulations will govern different subareas of the sharing economy, reduce barriers for new market entities and prevent risks, the guideline said. The document was approved in principle at a State Council executive meeting on June 21, which was presided over by Premier Li Keqiang. The document said the government expects orderly competition among sharing-economy companies and will regulate monopoly actions by such companies to ensure legitimate rights of consumers and public well-being. Specific tax policiessuitableforthedevelopmentofasharing economy will be released to boost the sector, the guideline added.

Drug price markups to be abolished

Drug price markups will be eliminated at public hospitals directly administered by the National Health and Family Planning Commission, and the State Administration of Traditional Chinese Medicine, according to a notice jointly issued by the commission, the Ministry of Finance and five other ministries.

The document requires these public hospitals to follow local drug pricing reforms, participate in building a hierarchical medical system and carry out the medical insurance payment reform.

Helping schools in poor areas

Facilities and other conditions will be improved for schools that provide compulsory education in poverty-stricken areas, according to a notice jointly promulgated by the Ministry of Education and the Ministry of Finance.

Poverty-stricken counties will receive supportive policies to push forward comprehensive improvements in school buildings and facilities by the end of this year, the notice said.

Local authorities will be called to account, if found neglecting duties with delays in programs or serious problems quality and safety risks.

In 2015, about 173,000 classes had more than 66 students, a decrease of 17 percent from that in 2013. By the end of 2018, classes of more than 66 students will be eliminated. By 2020, all classes will have no more than 56 students, the Ministry of Education said.

maximum number of students in a class in China by 2020, according to the Ministry of Education

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National customs clearance

China’s customs clearance has been integrated since the beginning of this month, making it possible for companies to apply for such procedures at any customs office across the country, according to the General Administration of Customs.

Under the new framework, companies will be allowed to declare cargoes with a single submissionatanycustomsinthecountry.After a safety check following the submission, cargoes will be transported to the next stop. Tax payments can be processed afterward.

Centers for risk prevention and tax collection have been established to operate in a concerted, integrated and smart manner. For companies, a single standard is implemented at customs, which will provide them with an integrated and convenient clearance.

GAC officials said the integration has reduced the time for customs clearance and will bring benefits for companies by increasing efficiency and streamlining procedures.

SHI YU / CHINA DAILY