Streamline Administration, Delegate Power, Strengthen Regulation And Improve Service to Deepen Administrative Reform and Transform Government Functions
Li Keqiang
Premier of the State Council of the People's Republic of China
I. To deepen administrative reform and transform government functions are a strong driving force 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%. 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% 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 cancelled in favor of annual information disclosure. The number of qualification accreditation and performance appraisal 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 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, cancelling or delegating administrative approval power for over half or, in the highest case, 70% of the matters. 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 livelihood, 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% 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 by 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 shirking 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 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.
