Full Text: Report on the Work of the Government

III. Deepening Reform and Opening Up

Reform and opening up is crucial for driving development. We must focus on economic structural reform as we comprehensively deepen reform, taking all things into consideration in planning, working solidly to deliver concrete results, making new breakthroughs in areas that can boost development as a whole, and strengthening new momentum to drive development.

We will do more to streamline administration and delegate more powers to lower-level governments and to society in general while improving regulation.

This year, we will delegate the power or cancel the requirement for government review for more items, cancel all non-administrative review, and establish a system for exercising well-regulated management over the government review process. We will deepen reform of the business system; further simplify the process for capital registration; take gradual steps to integrate the business license, the organization code certificate, and the certificate of taxation registration into one certificate; and overhaul and regulate intermediary services. We will draw up a negative list for market access, ensure that provincial-level governments make their lists of powers and responsibilities open to the public, and make sure that anything the law does not authorize is not done, while all duties and functions assigned by law are performed.

Local governments must completely let go of powers that should be delegated to the market or society, and properly exercise the power of review over all items that have been delegated to them by higher-level governments. We will exercise stronger oversight both during and after the handling of matters, and improve the network of services for both enterprises and the general public. We will work to improve the credit rating system, put in place a national unified system of codes for rating credit, and establish a platform for sharing and exchanging information on credit. We will, in accordance with the law, protect the information security of enterprises and individuals.

It goes without saying that powers should not be held without good reason. Governments at all levels need to adopt effective ways to streamline administration, delegate powers, and transform their functions, creating an enabling environment for enterprises, making it easier to start up in business, and creating the right environment for fair competition. Procedures and processes must be simplified and time frames must be clarified for all items requiring administrative review, and cuts to government power will be made to boost market vitality.

We will take multiple measures to reform the investment and financing systems.

We will substantially reduce the number of investment projects that require government review, delegate more powers of review to lower-level governments, significantly streamline the need for preliminary review for investment projects, and conduct project reviews online. We will greatly relax market access for private investment and encourage the use of private capital to set up equity funds. The government will guide nongovernmental investments toward key projects by subsidizing investments, injecting capital, and establishing funds. We will deepen reform of railway investment and financing by making good use of railway development funds. We will actively promote models of cooperation between government and nongovernmental capital in developing infrastructure and public utilities.

We will take timely action to accelerate price reform.

This reform is aimed at ensuring the market plays the decisive role in allocating resources and significantly reducing the number of categories and items of goods and services for which prices are set by the government. In principle, we will lift pricing controls over all goods and services that can viably compete in markets. The government will stop setting prices for most pharmaceuticals and delegate to lower-level governments the power to set prices for certain basic public services.

We will expand the trials of pricing reforms for electricity transmission and distribution, carry out pricing reforms for water used in agriculture, and improve pricing policies to make them more conducive to energy conservation and environmental protection. We will improve the pricing of resource products and fully implement a system of tiered pricing for electricity, water, and natural gas used for household purposes. At the same time, we must strengthen oversight over pricing, improve market order, and ensure the basic living standards of people on low incomes.

We will ensure that progress is made in the reform of the fiscal and tax systems.

We will put in place a comprehensive, well-regulated, open, and transparent budgeting system. With the exception of cases where classified information is involved, all central and local government departments must release their budgets and final accounts for public oversight. We will increase the percentage of funds transferred from the budgets for state capital operations to general public budgets. We will introduce medium-term fiscal planning. We will design effective measures to make good use of government funds at hand.

We will devote serious energy to completing work to replace business tax with VAT across the board, adjust and improve policies on consumption tax, and extend price-based resource taxes to cover more types of resources. We will submit a proposal to the NPC Standing Committee on revising the Law on the Administration of Tax Collection.

We will reform the transfer payments system, clearly define the respective powers and spending responsibilities of the central and local governments, and make appropriate adjustments to the division of revenue between them.

We will move ahead with financial reform to better serve the real economy.

We will encourage qualified private investors to establish, in accordance with the law, small and medium-sized banks and other financial institutions; there will be no quota imposed on them, and approval will be granted as long as all required conditions are met. We will deepen reform of rural credit cooperatives, and keep their status as legal persons in their counties stable. We will ensure development-oriented and policy-backed financial institutions function effectively in increasing the supply of public goods.

A deposit insurance system will be established. We will further liberalize interest rates and improve the central bank's framework for their regulation. We will work to keep the RMB exchange rate at an appropriate and balanced level and allow it to float more freely. We will make steady progress in realizing the convertibility of the RMB capital accounts, expand the use of the RMB internationally, accelerate the establishment of a cross-border payment system for the RMB, improve the worldwide clearing system for the RMB, pilot private overseas investment, and launch the Shenzhen-Hong Kong Stock Connect on a trial basis at an appropriate time.

We will strengthen the multilevel capital market and implement the reform to introduce a system of registration for issuing stocks. We will develop regional equity markets to serve small and medium-sized enterprises, carry out trials of equity crowdfunding, encourage the securitization of credit assets, prompt an expansion of the issuance of corporate bonds, and develop the financial derivatives market. We will launch insurance to cover major disasters and commercial pension schemes that allow for deferred payment of individual income tax.

We will explore new approaches to financial regulation to prevent and diffuse financial risks. We will channel great energy into developing inclusive finance and ensuring equitable access to financial services for all market entities.

We will deepen the reform of state-owned enterprises (SOEs) and state capital.

We will push forward with targeted reform of SOEs on the basis of having clearly defined their functions. We will move more swiftly in carrying out trials on establishing state capital investment companies and operating companies, create a market-based platform for state capital operations, and improve their performance.

We will take systematic steps to implement the reform of introducing mixed ownership to SOEs, and both encourage and regulate equity investment made by non-state capital in SOE investment projects. We will accelerate structural reform of the electricity, oil, and natural gas industries. We will work, through multiple channels, to relieve SOEs of their obligation to operate social programs and help them solve longstanding problems, while at the same time ensuring that the legitimate rights and interests of workers are protected. We will ensure that SOEs improve their modern corporate structure, and incentive and restraint mechanisms for their executives are reformed and strengthened. We will strengthen regulation of state-owned assets and guard against their loss, and ensure that SOEs improve their performance.

The non-public sector is an important component of China's economy. We will remain firmly committed to encouraging, supporting, and guiding the development of this sector, work to enable entrepreneurs to give full expression to their talent, put into effect all policies and measures encouraging the development of the private sector, strengthen the vitality of enterprises under all types of ownership, and protect the property rights of all types of enterprise-legal persons in accordance with the law.

We will continue to push ahead with reforms in science, technology, education, culture, medical and health care, pensions, public institutions, and the housing provident fund. Development needs to be driven by reform, and the people are expecting the real benefits reform delivers. We must work hard to make sure that reform boosts development and benefits our people.

Opening up is itself a reform. We must carry out a new round of high-quality opening up, move more swiftly in building a new open economy, and maintain momentum in development and in international competition by pressing ahead with opening up.

We will transform and upgrade China's foreign trade.

We will improve the mechanism for sharing the cost of export tax rebates between the central and local governments, with the central government paying all the increase for the benefit of local governments and exporting enterprises beginning in 2015. We will overhaul and regulate charges for imports and exports, and establish and release a complete list of such charges. We will implement policies and measures to enable China's foreign trade to develop new competitive edges, facilitate the transformation of processing trade, develop market purchase trade and a comprehensive service platform for foreign trade, expand comprehensive trials in cross-border e-commerce, turn more cities into trendsetters in undertaking services outsourced by other countries, and increase the share of service trade in China's foreign trade. We will adopt a more active import policy to increase the import of advanced technology, key equipment, and important parts and components.

We will take a more active, more effective approach to making use of foreign capital.

We will revise the Catalogue for the Guidance of Industries for Foreign Investment. We will focus on making the service and manufacturing sectors even more open by halving the number of industries in which foreign investment is restricted. We will introduce, across the board, the management system under which foreign investment projects generally need only to be placed on record, with government review required in only a limited number of cases. We will delegate to lower-level governments the power of review for a large number of projects that are encouraged by the state; and work actively to explore the management model of pre-establishment national treatment plus a negative list. We will work to improve the foreign investment regulatory system, revise laws concerning foreign investment, and create a stable, fair, transparent, and predictable business environment.

We will speed up the implementation of the "go global" strategy.

We will encourage Chinese companies to participate in overseas infrastructure development projects and engage in cooperation with their foreign counterparts in building up production capacity. We will work to increase the international market share of Chinese railway, electric power, communications, engineering machinery, automobile, aircraft, electronics, and other equipment, and encourage the metallurgical, building materials, and other industries to invest overseas. Outbound investment will be mainly managed on a record-keeping basis. We will scale up export credit insurance to provide export financing insurance for all insurable complete sets of large equipment.

We will broaden the channels for using foreign exchange reserves, provide better financial services, information services, legal services, and consulate protection to Chinese firms investing abroad, guard against risk, and strengthen our capacity to protect the rights and interests of Chinese enterprises overseas. We are confident that these steps will enable Chinese companies to go global and go steadily, emerging stronger in international competition.

We will foster a new environment in all-round opening up.

We will work with the relevant countries in developing the Silk Road Economic Belt and the 21st Century Maritime Silk Road. We will move faster to strengthen infrastructure connectivity with China's neighbors, simplify customs clearance procedures, and build international logistics gateways. We will work to build the China-Pakistan Economic Corridor and the Bangladesh-China-India-Myanmar Economic Corridor. We will make China's interior and border areas more open to the outside world, promote the innovation-driven development of economic and technological development zones, and upgrade both border and cross-border economic cooperation areas. We will work actively to develop pilot free trade zones in Shanghai, Guangdong, Tianjin, and Fujian, and extend good practices developed in these zones to the rest of the country so that such zones become leading reform and opening up areas, each with its own distinctive features.

We will promote multilateral, bilateral, and regional opening up and cooperation.

We will uphold multilateral trade systems, work to promote expansion of the Information Technology Agreement, and take an active part in international talks in areas such as environmental products and government procurement. We will move faster to implement the strategy of developing free trade zones, ensuring that agreements on free trade zones with the Republic of Korea and Australia are signed as soon as possible; stepping up negotiations on the China-Japan-RoK Free Trade Zone; working for progress in talks on free trade zones with the Gulf Cooperation Council and Israel; endeavoring to complete the talks on upgrading the China-ASEAN Free Trade Zone and on establishing the Regional Comprehensive Economic Partnership; and working to build the Asia-Pacific Free Trade Zone. We will continue negotiations on investment agreements with the United States and the European Union. As a responsible and enterprising nation, China champions the vision of promoting mutually beneficial development, boosting the global economy, and encouraging economic globalization.