Chinese parliamentary sessions 2014

Company registrations at 10-year high as Beijing reduces red tape

PUBLISHED : Thursday, 13 March, 2014, 11:12pm
UPDATED : Friday, 14 March, 2014, 5:56am

The number of new companies registered in the past year hit a 10-year high as the central government's efforts to cut red tape bore fruit.

Registrations of private companies rose 30 per cent from a year earlier, indicating that "cutting red tape and delegating power were powerful tools to boost the market's vitality and social creativity", Premier Li Keqiang said yesterday.

Last year, the central government cancelled 416 administrative procedures for examinations and approvals, sending a strong signal that it was "loosening the shackles on companies and giving the market a bigger role", Li said, echoing a vow made at last year's parliament gathering.

From October 1, fees were reduced for 20 services performed by 14 central government bodies, saving firms and individuals about 200 million yuan (HK$252 million) a year, the National Development and Reform Commission said in August.

The government has done a good job in quantity, but now it should look at quality

Simplifying procedures had given the government more time to "improve and innovate [on] macroeconomic control", Li said.

The government would continue to come down hard on fraud, infringement of intellectual property rights, and other deeds that hampered fair competition, he said.

Zhu Lijia , a professor of public policy at the Chinese Academy of Governance, said reducing bureaucracy directly contributed to the creation of new firms "because approvals are simpler and the required amount of registered capital is lower".

But what really counted was whether the new firms could perform efficiently once established.

"The government has done a good job in quantity, but now it should look at the quality," Zhu said. "Problems will arise if instructions are not implemented at the grass-roots level."

Zhou Dewen, chairman of the Small and Medium-sized Enterprise Development Association in Wenzhou , Zhejiang province, said the central government's efforts to slash red tape "had generated enthusiasm for entrepreneurship to a large extent".

Businesses had been spared much trouble, for example, by simplified yearly check-ups on whether firms were running normally, he said. But many departments still followed complicated bureaucratic procedures on the grounds that they had yet to "receive orders from above".

Mei Yonghong , mayor of Jining , Shandong province, was quoted by Xinhua as saying that government reform still had some way to go. She complained that her staff had to approach a central government body 19 times last year for a single project.

"The government is placing too many trivial things in its own hands - too many things that it can't actually handle," she was quoted as saying.

Yuan Zhilun , a Chongqing businessman and a National People's Congress delegate, told Xinhua that while his investments overseas were usually examined for only two reasons - production safety and pollution - his domestic projects were all subjected to tedious assessments. "It took two to three years just to get one project approved," he said.