China Cuts Administrative Examination and Approval Items

Nov. 12 – For some time now, the over-regulated administrative approval system in China has led to unnecessary government intervention in the country’s economic development and resulted in both low market efficiency and bureaucratic corruption. In 2001, China began to reform its administrative approval system by reducing administrative examination and approval items with the aim of clearing systematic obstacles for its social and economic development and helping to curb corruption.

In August this year, China’s State Council decided to further transform government functions and on September 23 released the “Decision on the Cancellation and Adjustment of the Sixth Batch of Administrative Examination and Approval Items (guofa [2012] No. 52, hereinafter referred to as the ‘Decision’)” with a special focus on the real economy, small and micro-sized enterprises, and private investments.

The Decision has cancelled and adjusted 314 administrative examination and approval items, among which 171 administrative examination and approval items have been cancelled and 143 administrative examination and approval items have been adjusted (including 117 administrative examination and approval items delegated to lower administrative levels). So far, 2,497 administrative examination and approval items have been cancelled over the past decade, accounting for 69.3 percent of the total.

Moreover, efforts have been made to reduce the excessive regulations that subject foreign investment to prior governmental approval. Among the 314 administrative approval items cancelled or adjusted in this batch, 16 items related to foreign investment have been cancelled, and 21 items related to foreign investment have been adjusted, creating a more attractive environment for foreign investment.

The Decision also emphasizes that the government must refrain from interfering with items that the citizens, legal persons or other organizations may decide at their own discretion, the market competitive mechanism may effectively regulate, and industrial organizations or intermediary institutions may manage through their self-discipline. Besides, where post-supervision and indirect management of items may be adopted, any pre-examination and approval must not be established.

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