China Issues Guidelines to Deepen Economic Reform

June 14, 2013 Posted by China Briefing Reading Time: 3 minutes

Jun. 14 – With the view to seek stable growth and promote the country’s economic transformation, China’s National Development and Reform Commission released the “Opinions on Key Tasks for Deepening Economic Structural Reform in 2013 (guofa [2013] No. 20, hereinafter referred to as the ‘Opinions’)” on May 24, which puts forward 22 major tasks in several key fields. Detailed information can be found below.

Fiscal and taxation system

Improving the fiscal budget system and establishing an open, transparent, standardized and complete budget system
Adjusting the scope and rate of consumption tax, and including the products that seriously pollute the environment or consume large volumes of resources under the taxable scope
Expanding the scope of the pilot program for property tax on individual housing
Expanding the scope of ad valorem collection of resource taxes to cover coal and other taxable items, and cancelling relevant fees or funds in coal exploitation and sale
Improving the fiscal and tax policies for the growing, technological and export-oriented small or micro-sized enterprises
Expanding the scope of business tax (BT) to value-added tax (VAT) pilot conversion

The BT to VAT pilot conversion shall be carried out in the transportation industry and some modern service sectors nationwide, and the railway transportation, post and telecommunications and other relevant industries shall be incorporated into the scope of the pilot program.

Financial system

Expanding the scope of the pilot program for the small and medium-sized enterprise share transferring system
Promoting the formulation of the plan for implementing the deposit insurance system and establishing a risk compensation and sharing mechanism for financial institutions
Promoting the interest and exchange rate liberalization:

The range for deposit and lending interest rates floating shall be expanded and the market benchmark rate system shall be established and improved.

The system for the formation of RMB exchange rate shall be improved.

The convertibility of RMB under capital accounts shall be pushed forward steadily.

The system for the qualified domestic individual investors to make investments overseas shall be set up.

Research shall be done to push forward the domestic issuance of RMB bonds by qualified overseas institutions.

Investment and financing system

Cleaning up the policies and regulations that hinder fair competition, thereby pushing forward the effective entry of private capital into the areas of finance, energy, railways and telecommunications
Reforming the railway investment and financing system

The compensation system for public-benefit transport and a proper pricing mechanisms for rail operations shall be established, thereby creating conditions for the introduction of private capital into the railway sector.

Prices of resource products

Pushing forward the electricity fee reform and simplifying the price classification in the sales of electricity
Facilitating the construction of a nationwide market system for coal trading
Establishing a ladder-price mechanism for electricity, water and natural gas to charge higher per-unit prices for extra usage

Administrative system

Deepening government institutional reform
Streamlining governmental administration and delegating powers to lower levels
Innovating government public services

Basic livelihood system

Facilitating the critical illness insurance for urban and rural residents
Establishing and improving the system on guaranteeing minimum living standards
Establishing the strictest regulatory system for food and drug safety to cover various stages of production, circulation and consumption
Establishing the strictest environmental protection supervision and administration system and the standardized and scientific ecological compensation system:

Formulating comprehensive measures to strengthen prevention and control of air, water, and rural (soil) pollution.

Implementing the pilot trading program on pollution-discharge rights and carbon emission rights.

Conducting research to set up a national trading market for pollution-discharge rights and carbon emission rights, and implementing the pilot program for compulsory liability insurance for environmental pollution.

Formulating measures on investigating and handling environmental emergencies and conducting research on the ecological compensation regulation legislation.

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