On 27 May 2010, the State Council released a notice asking all provincial governments and ministries to implement the Deepening Key Tasks in Economic Reform in 2010 Opinions (the Opinions) issued by the National Development and Reform Commission (NDRC). The Opinions set out the direction, objectives and requirements for reform in a number of important areas of social and economic policy, and give an indication of likely future legislative and regulatory amendments. The reforms primarily cover the following areas.
Non-public sectors of the economy
The provisions in the Opinions relating to non-public sectors of the economy should be read together with the Encouraging and Guiding the Healthy Development of Private Investments Several Opinions (the Several Opinions) recently released by the State Council. The Several Opinions emphasize support for private capital investments in various sectors such as primary industries, infrastructure, public utilities, social undertakings and financial services; encourage the exit of state-owned capital from general competitive areas when the timing is right; and continue to develop policies to support small businesses by implementing a sound credit guarantee system, launching new, experimental financial products in support of small business financing, and formulating favourable government sourcing policies.
State enterprises and monopoly industries
The power and salt sectors, two monopoly industries in China, will be reformed; reforms will be introduced to the corporate and shareholding systems in the parent companies of large state-owned enterprises, especially central enterprises; and the supervision of state-owned assets abroad will be increased.
Environmental and resource pricing
The pricing of water (primarily for residential and agricultural purposes) and of energy such as electricity, natural gas and refined oil will be revised; a charging scheme will be implemented for urban sewage, and for the disposal of household and medical waste; research will be carried out on the formulation of a deposit scheme for hazardous waste disposal; and the pilot emissions trading programme will continue.
Tax reform
A resources tax reform package will be introduced to rationalize urban construction taxes and education surcharges for foreign and domestic enterprises and individuals; property tax reform will gradually be implemented, and the consumption tax regime will be improved; and research will be conducted into modifying the personal income tax regime and introducing an
environmental tax.
Financial sector
The mechanisms for monitoring cross-border capital flows will be improved; the General Rules on Loans will be revised; a set of measures governing equity investment funds will be introduced to improve the mechanisms for regulating venture capital in emerging industries; policies relating to the Growth Enterprise Market will be improved by launching an over-the-counter market; and more reforms will be carried out to rural credit
cooperatives.
Domestic and foreign economic sectors
Government investment regulations, regulations governing the approval and filing of enterprises’ investment projects, measures governing entrusted construction and overseas investment regulations will be enacted; and foreign investment-related legislation will be amended to further simplify and standardize foreign investment approval procedures and to establish a security scheme for screening foreign M&A projects.
Livelihood security system
A security system will be set up for collective bargaining and payment of the wages of workers in enterprises; the payroll management systems of state-owned enterprises, particularly those in the monopoly industries, will be reformed to improve the pay distribution and regulatory mechanisms for the senior management staff of state-owned enterprises and financial institutions; more low-rent, public rental and affordable houses will be built; reconstruction will be carried out in urban, industrial and mining areas as well as areas of poor-quality housing; and a comprehensive policy will be introduced to promote the long-term and healthy development of the real estate market.
