Further promoting reform of the business system was discussed during the State Council executive meeting on May 18. The reform is also considered a crucial measure to create job opportunities, unleash market potential and push for economic growth.
The reform started in 2014, largely loosening the regulations over market access. Also, from October 2015, the government began to promote the “three (Industrial and Commercial Business License, Organization Code Certificate, and Tax Registration Certificate) in one business license”. The simplified process shortened the registration process and made business registration more convenient. In the first quarter, newly registered enterprises reached 1.06 million, a year-on-year growth of 25.9 percent. And a daily average reached 11,700.
This time, the simplified process will be expanded from the original three licenses or certificate to five, including social insurance and statistics registration certificate, and from enterprises to individual-owned businesses.
To reduce the time for obtaining administrative permits, the State Council also approved a pilot reform program that will run in Shanghai to test the separation of business licenses from administrative permits, allowing some companies to get their businesses up and running before obtaining administrative permits.
The meeting also said a market exit mechanism must be put in place to clear out “zombie enterprises” and promote “the survival of the fittest” in a competitive market environment. The State Administration for Industry and Commerce is running test reforms in several regions such as Shanghai and Shenzhen city, as well as Jiangsu and Zhejiang province, to carry out an “easy cancellation” process for any enterprises with no business. In the meantime, local governments should also be cautious of enterprises that intend to escape debts and liabilities.
A special channel will also be open to support people who are laid off as a result of excess capacity being cut. It will lower the threshold for business start-ups and help promote higher success rates.