Cuts in red tape to help businesses

Facing a challenging economic slowdown, the Chinese government pledged on Wednesday to cut red tape in the private sector and reduce government intervention to encourage business growth.

About 300 procedures subject to government approval, mostly in the areas of real economy, small and micro-businesses and private investment, will be removed, merged or devolved to a lower level of authority to avoid overregulation, according to a statement released after a State Council meeting.

It is the second time in a month that the State Council has addressed the development of the private sector at its executive meeting.

At the previous meeting, on July 30, Premier Wen Jiabao urged for a "fair, transparent and predictable" economic environment for private capital and called for further reform of the administrative approval system for the sector.

Wednesday's meeting has seen Wen's pledge carried out, as governments are now required to retreat from administrative intervention in all sectors where "self-discipline and self-regulation by the market and trade associations are possible".

Wednesday's decision is among many policies that China has introduced to slow down an economic downturn after the government posted a three-year-low growth rate of 7.6 percent in the second quarter, triggering fears of a hard landing.

At the meeting, officials also decided to roll out a pilot reform in Guangdong province, where further reduction of red tape will be allowed. The statement said Guangdong, on the country's frontline of reform and opening up the economy, has a more mature market economy than other places.

Zhang Jianhua, chairman of the Hubei Chamber of Commerce in Wenzhou, a city in Zhejiang province known for small and medium-sized businesses, said eliminating red tape for small and micro-businesses is necessary, especially in the current economic environment.

He said about 10 percent of companies with membership in the chamber have closed down, and about 20 percent are struggling. The companies hardest-hit are in labor-intensive industries, he said.

Zhang urged the government to recognize the importance of private capital in economic development and creating jobs.

"Burdensome government approval, apart from rising labor cost and fines, has been a drag on small businesses, especially for entrepreneurs," he said. "The government has the responsibility to offer a comfortable environment for these businesses."

The move on Wednesday is the sixth time in a decade the central government has launched a reform to clean up its overregulated administrative approval system, which has led to unnecessary intervention and sometimes rampant corruption. Now, almost 2,500 processes, 69 percent of the original number, have been canceled or streamlined, according to the statement.