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Legal Highlights

Decentralization and Increase of Market Accessibility

2013.07.29

China’s new leadership advances reforms seriously, and is accelerating the elimination of approval hurdles and the delegation of approval authority to various local authorities. State Council recently issued the Decision of the State Council on Cancellation and Decentralization of 50 Items of Administrative Examination and Approval Matters on July 13 (Guo Fa [2013] 27) and Decision of the State Council on Cancellation and Decentralization of a Batch of Administrative Examination and Approval Items on May 15, 2013 (Guo Fa [2013] 19 ), and totally canceled or decentralized 154 administrative examination and approval items, including 12 items for foreign investment projects involving joint venture in energy, education, medical care and other industries.

  • Cancellation of approval requirements. Among others, the following items of approval for investment are eliminated:

    1. Approval to Cooperate with Foreign Enterprises on Petroleum, Natural Gas and Coal Bed Gas.

    2. Approval to Retain President and Principal Administrator for China-Foreign Cooperative Education Institution.

    3. Approval to Change Name, Domicile, Legal Representative, or Business Items of Commercial Performances of China-Foreign Cooperative Performance Brokerage Institution.

    4. Approval of Changing Name, Domicile, Legal Representative, or Business Items of Commercial Performances of Equity or Contractual Joint-venture or Solely-funded Performance Brokerage Institutions Established by Hong Kong Administrative Region Investors and Macao Administrative Region Investors.

    5. Approval of Changing Name, Domicile, Legal Representative, or Business Items of Commercial Performances of Equity or Contractual Joint-venture or Solely-funded Performance Brokerage Institutions Established by Taiwan Region Investors.

    6. Approval on Importing Equipment, Apparatus, Film or Artifact Needs for the Film Production of China-Foreign Cooperation.

  • Decentralized Items. The items that were decentralized include but not limited to:

    1. Ratification of the Engagement by Enterprises from Foreign Countries (Regions) in Production and Business Activities Inside the Territory of China was decentralized from State Administration for Industry and Commerce (“AIC”) Office to local AIC office; and

    2. Registration of Resident Representative Offices of Foreign Enterprises was decentralized from State AIC Office to local AIC Office;

    3. Approval of Hong Kong Administrative Region Investors and Macao Administrative Region Investors Establishing Sole Proprietorship Hospital in the Mainland was decentralized from State Family Planning Commission to Provincial Health and Family Planning Department.

    4. Approval on Foreign Doctors Temporarily Practicing Medicine in China was decentralized from State Family Planning Commission to Municipal Districts Health and Family Planning Department.

New reforms aim at releasing the market forces and allowing more liberal autonomy into the market. As an important step of the reforms, China adopts a more proactive opening up strategy for foreign investment and gradually decreases or reduces the level of its foreign investment reviews and approvals. Such elimination and decentralization expects to provide more market access for domestic and foreign enterprises, enhances predictability for market participants and strengthens confidence in economic transformation and growth.