2013-11-09

China's Decentralization: Government Gives Up Power

Below is the Google Translation of an article in the Economic Observer on China's decentralization. (政府大放权) The title would literally translate as government greatly gives up power. Decentralization is what is happening, but there are other words for it. In other words, this is a major transfer, or abdication, of power by the central government.

Economic Observer reporter Zhang Xiangdong in China: With a total investment of billions of steel logistics park construction projects , to finish the entire approval process takes about two years ; a medium-sized wind power investment projects , to get more than ten government departments approval documents , the fastest to take three years ; while Baosteel Zhanjiang steel project of one , as a paper approvals, such as a full four years.

There is the cost of funds . According to a Chinese company for investment in wind power calculations, an average of 100 million yuan of investment projects , pre- approval or approval for their spending , up more than 300 million people.

Approval, approval , filing, which allow enterprises to feel at a loss of government investment project management tools, is ushering in a sudden change.

November 7 , the National Development and Reform Commission official told the Economic Observer newspaper said: "The group will be in accordance with the maturity to launch a number of principles , vigorously reduction and adjustment of administrative examination and approval matters who can effectively regulate the market , companies can decide the matter resolutely abolished approval, if they can be delegated to local matters delegated to local firm . "

Currently, drafted by the National Development and Reform Commission reported "government approved investment project directory ( in 2013 this ) " , has been the State Council approved in principle , will soon release. After this revised catalog of cancellation , decentralization and transferred matters involving corporate investment approved over 40 . In addition , the National Development and Reform Commission is also working to seize the introduction of " investment projects approved by management approach " and " filing system guidance ."

This is a make Chinese enterprises a decade of signals. 2004 , " the State Council on Reform of Investment System Decision" ( Guo Fa [2004] No. 20 ) reform goals established , after years of wandering back and forth , and finally in 2013 ushered in the real turning point.

Essay

Turnaround precursor , six months ago began to appear.

May 15, 2013 , " the State Council on canceled projects and decentralized group of administrative examination and approval matters such decision" ( Guo Fa [ 2013 ] No. 19 ) issued effective decentralization of cancellation and 117 administrative examination and approval projects and other matters. September the State Council executive meeting , decided to cancel and re- delegation of 75 administrative examination and approval matters, while considered and adopted the principle of " government approved investment project directory ( 2013 ) ."

This is China over the past decade , the largest and most extensive range of big government decentralization .

China's current investment projects management system, introduced in 2004 by the "State Council decision on the investment system " established after China for all investment projects are to take the government examination and approval system , which requires prior government approval.

Although the authority delegated management of investment projects in 2004 made ​​it clear goal, but stakeholders believe that after decades of development , some of the content it is necessary to make some adjustments and reforms.

Chinese government is currently on the management of investment projects for approval, approval and filing three forms. Approval system only for the nature of the investment with the government , or government-funded investment projects. While business investment projects, urban infrastructure and other major investment projects , as well as iron and steel , chemicals and other restricted investments are taking approval system ; most competitive industries business investment , then take the filing system .

According to the National Development and Reform Commission relevant institutions of research, Chinese enterprises to invest in the project , about 80% of the filing system , and the remaining 20% is the approval system . SAIC data show that as of the end of 2012 , the country implemented a corporate 13,660,000 . So numerous and the number of enterprises and investment projects, the government is clearly tube , but come .

But China's huge government management system , relying on approval, approval and filing , still dominates almost every one of our investments .

Especially for business investment class project, in principle, does not involve the size of funds in addition to the project construction content, construction standards and other corporate decision-making content, the government also depending on the project , from environmental protection, land , water, to the fire , mining and other unequal number areas for approval.

The record company is currently the most liberal investment conditions a form , mainly for small and medium- sized enterprises investment projects . WU Ya-ping said: "The original intention of taking filing system , which was originally the government in order to better grasp the social investment situation , gather information for the macro-control , but the record is actually a pre- examination and approval in principle , no government record items not start construction . "

However , the above three management methods, in principle, only applies to the NDRC system investments. In the NDRC outside the system , including the Ministry of Finance , Ministry of Science and other relevant ministries within the system , but also holds a large number of investment projects using government funds . This part of the scale of government investment greatly exceeds the NDRC system investment by the relevant departments for approval within the system accordingly .

According to expert estimates , the most recent years, the Chinese government investment scale of the project , the annual accounts for the year total fixed asset investment of 5% . In 2012 the country completed 36480000000000 total social fixed assets investment , when the scale of government investment of 1.8 trillion. And then , clearly owned by the State Development and Reform Commission system management of government investment project size of only 402.6 billion .

For decades, " approval, approval, filing " This three reins , rode in China each year tens of trillions of investment projects. Seems clear, execute it, it is often Kowloon flood : Repeat approval after another, the absence of regulation is also not uncommon.

Approval of the pain

Jiangsu, a large-scale iron and steel enterprises a profound understanding of the person in charge of the Government for approval .

In 2011 the company launched an investment of billions of steel logistics park project , to be reported to the Provincial Development and Reform Commission and the relevant functional departments of the province for approval . In order to obtain approval documents , the responsible person spent two years , nearly 10 million related to funding .

First, they need to report to the provincial Development and Reform Commission project feasibility report , including technology selection, economic support , market outlook and whether they meet the national industrial policy and so on. This is a stepping stone to the entire investment project , but in order to smooth the doors opened to the government , there are also a lot of knowledge .

This steel company official said : "The project feasibility report need to find a special relationship with the NDRC units do, because whether the approved feasibility study report , demonstrate how science is not feasible , this report is very important who will do . " a project feasibility report , you may need to spend hundreds of million. During the examination and approval department approved companies do not know the specific basis for the report and what is the criterion . The responsible person said, "I think the government departments do not know, because there is no standard ."

Feasibility report is approved, the company began to report to the NDRC entire logistics park project's overall planning, accompanied by the relevant environmental protection, land , security and fire protection and other sectors , but also need to find a specific functional departments for approval. All approvals completed , the project started by the government before becoming licensed .

This is just across the road steel logistics project approval of the first stage. Thereafter, in the logistics park project launched any one monomer , are required to re-take once the approval process. The steel company official said, " the steel industry , in addition to environmental protection , homeland , security and other aspects of professional influence approval is required , the other should be canceled ."

Get approval, has been lucky . National Development and Reform Commission , Ministry of Industry , China Steel Association and other relevant departments have survey data show that China currently more than 900 million tons of steel production capacity , nearly 500 million tons did not get approval. Ministry officials of relevant departments and bureaus on the Economic Observer reported , "said one industry investment management policies , such as performing for many years , we found that most companies are not compliant behavior can only explain this policy is a failure ."

State approval authority delegated to the aforementioned charge a steel company in Jiangsu feeling is just authority delegated to local governments only, the walk to get the approval of the program and a no less . " The only difference is that the original need some approvals to Beijing to fight , and now only need to go to the province on it ."

In the wind power industry to take approval system , launched a medium-sized wind power projects , government approval to finish the marathon , the fastest also need three years. Beijing investment in wind power company responsible for a person's experience is that , for enterprises , approval and approval and in fact there is not much difference. He said that in general a wind power investment projects pre- approved costs, accounted for about 3% of the total investment .

Chinese Academy of Social Sciences Institute of Industrial Economics Jin Bei said: " Chinese enterprises to invest in the competition , in fact, than the competition for government approval , rather than see the project itself . Cancellation and decentralization of investment approval authority , the test of the government trust in the ability of the market to what extent configuration , which is a need to reform the institutional mechanisms to solve the problem . "

Years of wandering

Government to establish the confidence of the market and enterprises have been consuming for years. During all levels of government investment decentralization , full of twists and turns and reversals .

July 2004 , " the State Council decision on the investment system ," the official announcement , but "the government approved investment project directory ( 2004 ) " is also an issued . These two documents , one executed ten years. Although the National Development and Reform Commission has repeatedly said that revised investment directory , but has not been introduced.

Moreover, the State Department identified the decentralization reform of investment system as a whole to the general direction of the market , the department is in charge of investment income through a variety of means to disguise the right . These tools include : Repeat approval, from time to time to improve the proportion of capital projects , set up a new investment approval or approval threshold set market access conditions , suspend or discontinue some of the project approval and so on.

Relevant information, China successively in 2004 , 2009 and twice in some industries to improve the proportion of capital projects in the field , involving steel, cement , real estate , coal, airports, ports, corn deep processing. Including iron and steel , electrolytic aluminum industries such minimum capital ratio reached 40%. December 2010 , the polysilicon industry has also been set project capital of not less than 30% of other investment threshold .

August 2012 , the National Development and Reform Commission released a report entitled "significant fixed assets investment projects Interim Measures of social stability risk assessment " file, the risk of major investment projects were divided into high , medium and low risk level , where is assessed that the presence of high risk or medium risk projects will not be approved by NDRC approval and Nuclear Phys.

Relevant experts believe that this increase is absolutely no need for approval , because the social basis of risk assessment , mainly relating to the environment , land, water resources, land acquisition and other aspects , the relevant functional departments have been approved with the approval conditions, completely unnecessary then set a threshold.

NDRC Investment Research Investment System and Policy Research Office WU Ya-ping said: "The investment system to promote a decade , and now need to re- sort and reflection, record-keeping system in the end should not be there ? Approval system scope and content , is not need to further reduce and adjust ? "

Situation began to change from the first half of 2013 . Decentralization in the new government 's request, "China's most powerful sector" NDRC began to accelerate investment approval to cancel or decentralized management. While these decentralized still with additional conditions, but at the local and corporate opinion, is not easy.

So far this year, the end of May , the National Development and Reform Commission has the urban rail transit investment approval authority for specific projects , as well as pre- national decentralized corporate bond investments to the relevant provincial departments , local still need to report to the NDRC 's overall local urban rail transit construction plan and shall not be altered , the National Development and Reform Commission on corporate bonds also retains the right to review the final .

Beginning

Decentralization, will continue.

National Development and Reform Commission official told the Economic Observer reported , "said " the government approved investment project directory ( in 2013 this ) "is published , will be canceled , decentralization and transfer of matters involving corporate investment approved more than 40 projects."

This is just a beginning. According to reports, the NDRC will henceforth " full market competition , companies have self- regulation, through economic and legal means can effectively regulate the projects," cancel approval system , to record-keeping system , mainly related to equipment manufacturing and processing industries investment projects. In addition , the National Development and Reform Commission is also preparing to cross cross would not exist a single major transport, energy and raw materials, project approval authority , delegated to local governments.

Vertical decentralization decentralization will be the next major way. National Development and Reform Commission official said, " The general idea is to stick to the correct handling of government and the market, government and society, and the relationship between central and local governments , try not to engage in horizontal transfer between the central departments . Minimizing approval, approved scope to further implement the enterprise investment autonomy . "


Currently, the National Development and Reform Commission is revising the " investment projects approved by management approach " and " filing system guidance" , these two documents will be approved by the local government , filing behavior to provide guidance .

End of May this year, the 2013 national conference on economic reform , the National Development and Reform Commission , said Xu Shaoshi , to clean up , cancel and decentralized approval matters . Conditions are ripe for matters resolutely open, do not hesitate , do not delay ; For some difficult, but in the long run need to be open for business , consider first pilot , and then abolished or decentralization .

Chinese Academy of Social Sciences Institute of Industrial Economics Jin Bei said: "The Chinese usually present ranking official thinking, once an industry out of the question , we would have found the government did not manage well . Need to change this concept , especially government departments , should believe that the market the power . "

WU Ya-ping said: "The need to further decentralization . Regardless of eighteen Third Plenary Session will reform and decentralization in the government put forward a clear opinion , this is a direction and a big trend ."

This is the Chinese government invested a large decentralized management eve - some people are still reluctant to power , but more people are eagerly looking forward to institutional deregulation .

Editor's Note >>

Third Plenary Session of the CPC eighteen on November 9 -12 days held in Beijing. How to continue to deepen reform are all looking forward to this meeting . For the Chinese economic reform which will be brought new opportunities , new trends ? "Economic new coordinates " series of reports attempts to explore twelve . Published six in a row after the issue, we will lock keyword is " Approval reform ", which is the end of this series of reports articles.

At this point, we like you, start looking forward to a better future for the Chinese economy .

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