On August 10, Jiang Xipei put forward six suggestions at the Symposium of the State Council on Supervising Cost and Burden Reduction. On October 29, he raised another six suggestions at the Symposium of the State Council on Optimizing Business Environment. In his view, the most fundamental business environment is the legal environment; the most important is the same pace and purpose.
Jiang Xipei (2nd from the left) Spoke at the Symposium of the State Council on Optimizing Business Environment
I. Protecting Legal Property by Law
Article 12 of the Constitution: Socialist public property is sacred and inviolable. The state protects socialist public property. Appropriation or damaging of state or collective property by any organization or individual by whatever means is prohibited. Article 13: Citizens’ lawful private property is inviolable. The state protects, in accordance with law, the rights of citizens to private property and to its inheritance. The state may, in the public interest and in accordance with law, expropriate or requisition private property for its use and shall make compensation for the private property expropriated or requisitioned. Article 13 is suggested to be revised as: Citizens’ lawful private property is sacred and inviolable as well. The state protects, in accordance with law, the rights of citizens to private property and to its inheritance. The state may, in the public interest and in accordance with law, expropriate or requisition private property for its use and shall make reasonably high compensation for the private property expropriated or requisitioned.
It is necessary to persist in implementing the Notice on Carrying out the Clear-up of Regulations and Normative Documents Concerning Property Right Protection (GBF. [2018] No.29) issued by the General Office of the State Council and other spirits so as to further enable those who have fixed property to have perseverance.
II. Accelerating the Improvement of Related Legal Provisions
1. The protection of public property is different from that of private property. Abuse of authority, dereliction of duty, bribery and corruption, infringement on private property, etc. are the cruces of many problems, which should be treated fairly and impartially.
2. To enable startups and entrepreneurial firms to grow and develop healthily and reduce the worries behind, it is suggested that: any business that produces and sells nonconforming products, does not reach the effluent discharge standard unintentionally due to management negligence, but has not caused any grave consequence, shall not be held criminally liable; such measures as economic penalties, rectification with a fixed period of time, and an order to suspend production / business may be taken.
3. Article 397, Chapter IX of the Criminal Law: [Crime of Abuse of Power; Crime of Dereliction of Duty] Any functionary of a state organ who abuses his power or neglects his duty, thus causing heavy losses to public money or property or the interests of the state and the people, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention; if the circumstances are especially serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years, except as otherwise specifically provided in this Law. Any functionary of a state organ who engages in malpractice for personal gain and commits the crime mentioned in the preceding paragraph shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention; if the circumstances are especially serious, he shall be sentenced to fixed-term improvement of not less than five years but not more than 10 years, except as otherwise specifically provided in this Law. The dereliction of duty of any staff of a state-owned enterprise may be subject to the above provision. But the paragraph does not include private enterprises. Thus, the dereliction of duty of private enterprises can be hardly put on record. This provision is suggested to cover private enterprises, which also need fair rule of law.
4. Article 173 of the Criminal Procedure Law: If any suspect is believed to have no facts of a crime or in any of the following circumstances, the people’s procuratorate shall make a decision not to initiate a prosecution. On September 12, 2016, the Information Office of the State Council issued a white paper on New Progress in the Judicial Protection of Human Rights in China. The white paper says that China enforces the principle of in dubio pro reo, actively prevents and corrects miscarriages of justice so as to avoid the repeated occurrence of such cases as the case of Zhang Wenzhong, Former Chairman of Wumei Holdings, and the case of Zhu Yicai, Former Chairman of Yurun Group, maintain judicial fairness and justice, and safeguard the human rights of parties concerned.
III. Accelerating the Improvement of the Law of the People’s Republic of China on Tenders and Bids
1. Article 41 of the Law of the People’s Republic of China on Tenders and Bids provides that the bid of a winning bidder shall satisfy any of the flowing requirements. Item 2: “To be able to satisfy the substantial requirements set in the tender documents and to have the bid price upon assessment that is lower than the average bid price, with the exception of the bid price which is below cost.” It requires observing the market law and the law of value, upholding integrity and law abidance fundamentally, and avoiding forged and fake commodities so as to promote the high-quality sustainable development of China.
2. According to Article 17 of the Administrative Measures for Product Quality Spot Inspection: “The samples under supervision and spot inspection shall be randomly taken by the samplers from the market or from the to-be-sold finished products in the warehouse of the enterprise, and the enterprise is not allowed to take samples itself.” It is suggested to be revised as: “The samples under supervision and spot inspection shall be randomly taken by the samplers from the market, users or from the to-be-sold finished products in the warehouse of the enterprise, and shall receive blind inspection. Meanwhile, the compliance and consistency of product standards in the process of production organization shall be supervised and randomly inspected. The manufacturer or seller is not allowed to take samples itself so as to achieve effective supervision, and promote corporate self-discipline, a normalized industry and an orderly market order.”
IV. Accelerating the Improvement of Related Tax Laws
1. According to the City Maintenance and Construction Tax Law (Exposure Draft): The rates of city maintenance and construction tax shall be as follows: 7% for a taxpayer in a city; 5% for a taxpayer not in a city. It is suggested to be revised as: The rates of city maintenance and construction tax shall be as follows: 5% for a taxpayer in a city; 3% for a taxpayer not in a city. In this way, the burden of taxpayers can be reduced to a rational burden.
2. A sole proprietorship does not pay enterprise income tax, but needs to pay individual income tax. Thus, it is suggested to be revised as: As with individuals buying / selling stocks on the secondary market, a sole proprietorship buying / selling stocks on the secondary market shall have no need to pay related taxes, which cannot be traced back further so as to maintain market fairness and order, and shore up market confidence.
V. Fair Market Competition
1. It is advisable to support Chinese enterprises unwaveringly, mainly support the sound and sustainable development of good Chinese enterprises which have high quality, strong brands, a sense of responsibility, and competitiveness, and allow the market to allocate resources, without distinction of ownership, central enterprises, state-owned enterprises, private enterprises and foreign enterprises, especially without system discrimination.
2. It is advisable to implement the Opinions on Establishing a Fair Competition Examination System in the Building of the Market System (GF [2016] No.34) issued by the State Council in 2016, regulate related acts of the government, prevent from issuing any policy or measure that eliminates or restricts competition, and gradually clear up and abolish the regulations that hinder the rules and practices of the unified national market and fair competition. It is necessary to fully implement the negative list system of market access, guarantee the legal and equal market access of market players, clear up and abolish the rules and practices that hinder the united market and fair competition, and improve the market environment with equal rights, opportunities and rules.
3. It is advisable to establish a benign, healthy and sustainable market order. The use of performance guarantee is suggested to reduce mutual arrears of chain debts, especially substantial arrears owed to private enterprises by central enterprises and state-owned enterprises. It can facilitate not only the construction of the credibility system, but also the significant reduction of transaction costs, judicial costs, as well as operation risks and financial risks of enterprises.
4. It is advisable to loosen the requirements for the place of incorporation. Nowadays, different cities have different requirements for the place of incorporation. Some cities only allow office buildings, stores and other commercial real estate to register companies. It is recommended to include all fixed places such as residential houses, warehouses and dwellings in the scope of places of incorporation.
VI. Strengthening Service and Supervision, Increasing Efficiency
1. In August 2018, the General Office of the State Council issued the Notice of the Plan for Division of Key Tasks of the National Teleconference on Deepening Reforms to Delegate Power, Streamline Administration and Optimize Government Services and Transforming Government Functions (GBF [2018] No.79), requiring reducing the 38 categories of products concerning industrial product production license management by more than one third in 2018, and compressing the license obtaining time from 22 working days averagely to 9 working days averagely; further reducing the products concerning industrial product production license management to about 15 categories in 2019. This provision is suggested to be revised as: Reducing the 38 categories of products concerning industrial product production license management by about two thirds in 2018, and compressing the license obtaining time from 22 working days averagely to 5 working days averagely; further reducing the products concerning industrial product production license management to about 10 categories in 2019.
2. Article 8 of the Provisions on the Assignment of State-owned Land Use Right by Bid Invitation, Auction and Quotation: The assignor shall, at least 20 days before bid invitation, auction or quotation, release the announcement on bid invitation, auction or quotation, and announce the basic conditions about the land for the assignment through bid invitation, auction or quotation as well as the time and place for bid invitation, auction or quotation. Article 18: The time for quotation shall not be less than 10 working days. Article 8 is suggested to be revised as: The assignor shall, at least 10 days before bid invitation, auction or quotation, release the announcement on bid invitation, auction or quotation, and announce the basic conditions about the land for the assignment through bid invitation, auction or quotation as well as the time and place for bid invitation, auction or quotation. Article 18 is suggested to be revised as: The time for quotation shall not be less than 5 working days.
3. It is said that the China Banking Regulatory Commission recently requires withdrawing loans ahead of schedule from enterprises suspending production for more than four months, and lending loans after such enterprises restore production. In case of a failure to make a repayment, any companies suspending production will be immediately added to the list of defective credit. Moreover, the bad credit of enterprises is life-long. Banks are suggested to give enterprises suspending production a certain transition period, without withdrawing loans ahead of schedule, and appropriately support enterprises to restore production. In addition, the degree of tolerance should be different according to different loan risks and proceeds. The unwillingness to lend loans to private enterprises and the unwillingness to take responsibility should be avoided.
4. Class A large medical equipment should be examined and approved by the National Health and Family Planning Commission, and its application needs to be accepted by the provincial health and family planning commission. The new Regulations for the Supervision and Administration of Medical Devices issued in May 2017 specifically include private hospitals in administrative license management. Since the release of the new Regulations, there is no supporting management document issued by the National / Provincial Health and Family Planning Commission. In the “vacuum period” of policies, the procurement examination and approval of hospitals submitted to the provincial health and family planning commission has not been accepted as there is no guidance document, causing the equipment purchased by hospitals to be unable to be used, with huge damages. In case of the above problem existing in the large medical equipment procurement of private hospitals in the “vacuum period” of policies, the health and family planning commission is suggested to provide services actively, give fair treatment, and solve such problems as soon as possible so as to enhance the confidence of enterprises.
5. It is advisable to give better play to the role of trade chambers of commerce and industry associations, and delegate part of the functions of government-administered enterprises and the market to chambers of commerce and associations so as to be better integrated into the market and promote economic and social development.
Site of the Symposium of the State Council on Optimizing Business Environment
