China cut red tape to quicken investment

Last Updated: Wed, Aug 22, 2012 11:47 hrs
A resident cast his net while standing on a fence partially submerged by the overflowing Yangtze River in Chongqing

China has cleaned up red tape to quicken investment in the real economy by small firms and the private sector, and allowed the southern province of Guangdong to go ahead with a pilot scheme to further reduce government interference in the economy, the State Council said on Wednesday.

The move came after China's powerful economic planner fast-tracked state investment and some cities announced new spending packages in the next few years to bolster growth.

Beijing is also trying to channel private funds to invest in sectors previously dominated by state enterprises and spur the development of small firms which provide the majority of jobs, after the world's No. 2 economy slowed in the past six quarters.

A meeting of the State Council, or China's cabinet, chaired by Premier Wen Jiabao, decided to either scrap government approvals or make it easier to get the greenlight to spur investment and social activities, according to a statement on the government's website,

"The key items reduced this time involve investment, social undertakings and non-administrative approvals. Particularly, we cleaned up approvals governing the real economy, the development of small firms and private investment," the cabinet said.

Since 2001 China has sought to cut red tape and let the market play a bigger role in the economy. In the past decade, the country has cut the number of business activities that need government approvals down by almost 70 percent.

The cabinet also decided to let Guangdong go ahead of other regions to stop or adjust unnecessary approvals in business activities, it said.

"Guangdong is in the forefront of China's reform and opening-up, market development is at a high level, and social economic development is entering a transitional period," the meeting concluded. "It must deepen reforms of the approval system and urgently change the function of government."

China is undergoing a once-in-decade top leadership transition this year, which coincides with a sharper-than-expected slowdown in the economy dragged by external headwinds as well as weakening domestic demand.

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