Nation plans to further liberalize business environment to create a fairer and more enhanced rule-based market

Private firms are happy to see that investment restrictions are to be further lifted, as China aims for further steps in reforming its investment and financing system, encouraging social investment participation with more compliant requirements, including for project planning and fire prevention.

The State Council’s executive meeting, chaired by Premier Li Keqiang on July 5, decided to further lift restrictions on private investors, while more measures to simplify project approvals are in the pipeline.

The meeting also urged that more high-quality assets be used in Public Private Partnerships (PPP) to attract a greater number of social investors, as well as using returns in such projects for new programs in infrastructure, public services, poverty alleviation, and the Made in China 2025 strategy, according to a statement after the meeting.

Chen Bing, head of a juice production company based in Suzhou, Jiangsu province, was excited to learn of the latest development. The 34-year-old is planning to open another juice production plant in another city in Jiangsu, but was hesitant as opening any new plants means getting a raft of approvals for fire prevention equipment and sanitary facilities.

“I am just afraid that it will take a very long time before the plant really starts operations, which may change our profit outlook,” he said.

Xiao, a construction design engineer who has been working with the city planning department of Beijing for over a decade and requested that her full name not be used, said she appreciated the lifting of restrictions. “On some occasions, it can take a long time and it is complicated for an investor to meet the demands on fire prevention and project planning when building a new factory plant.”

One project, she recalled, in particular was a private company that manufactures sewage treatment facilities in Beijing. The project, which started construction last year, failed to meet fire protection requirements during construction. It took the company more than a year to make adjustments and start operations.

Xiao said that while requirements regarding fire control are important, the current requirements and restrictions are sometimes too complicated, and efforts in meeting such requirements may lead to delays in operations and a loss of business opportunities for private investors.

Wen Bin, chief economist at China Minsheng Bank, said given the fact that China is transforming to a more consumption-driven economy from one driven by investment and exports, steady growth in investment is still important, as it helps the economy to grow in a proper range, while steadiness in social investment helps to build positive expectations for the economy.

“Consumption contributed to about 64.6 percent of China’s economy in the past year, and services have surpassed manufacturing in terms of contribution to growth, signaling that China is performing well in its supply-side structural reform. But investment still needs to be consolidated in maintaining steady economic growth, especially in areas of infrastructure and the real economy,” Wen said.

There is still a huge potential to be tapped for PPP programs, Wen said.

There are about 12,000 PPP projects across the country, Wen said, but many such projects are not composed of high-quality assets from the government side, making them less attractive to private investors.

“Some PPP projects in areas such as irrigation and environmental protection may lead to long-term operations, slow payback and low profits, but they will bring goods and enhance people’s livelihood in the long term,” Wen said. “The government must use a variety of financing tools to encourage private investors to participate, while making them more inviting to social capital, large or small, to accelerate more of these projects.”

In recent years, China has streamlined administrative reviews, focusing more on compliance oversight to make the business environment easier for private and foreign investors.

China’s private investment grew at 7.7 percent for the first quarter in 2017, a 2 percentage-point increase compared with the same period last year.

Premier Li has stressed a number of times that investment plays a vital role in boosting demand and consolidating employment.

Since 2013, the number of projects requiring approval from the central government has reduced by 90 percent, while the time required from approval being granted has also been reduced by 90 percent in some places, according to government statistics.

The premier also said when meeting with a group of economists and entrepreneurs on Thursday that aggregate demand will be appropriately expanded while effective investment, especially private investment, should be boosted to enhance the driving force that domestic consumption has provided.

More policy and market regulation innovations are in the pipeline to create a fairer and more enhanced rule-based market environment, as decided at the executive meeting on July 5. The upcoming measures will create a level playing field for investors from home and abroad, boosting steady private investment growth, according to the meeting.




Provinces map out paths to open up service sector

Local governments are setting ambitious targets on further opening up the service industry to foreign capital, as provincial-level authorities implement newly revised national guidelines.

More than 10 places, including Hubei, Jiangsu, Fujian, Zhejiang and Sichuan provinces and Shanghai, recently promulgated specific policies to encourage foreign investment in a wide range of sectors such as financial service, telecommunication, and internet sectors.

Local governments’ latest endeavors are consistent with the national goal set forth in the revised foreign investment catalog released by the National Development and Reform Commission and the Ministry of Commerce.

The new version of the catalog, which took effect in June, aims to further lower thresholds for foreign investors.

The move is considered a stride forward for the country to “open up its economy on a larger scale and deeper level”, said Bai Ming, vice-director of a research institute under the Ministry of Commerce.

In this round of opening-up, Shanghai municipal government is taking the lead.

In a plan published in April, Shanghai set goals to further open professional service industries such as finance, telecommunication, culture, maintenance and shipping, as well as manufacturing sectors like information technology, biomedicine, and intelligent connected vehicles.

Foreign-funded companies are also encouraged to participate in scientific and technological projects backed by the government, the plan said.

Jiangsu province, in east China, followed suit. It issued a plan to direct the foreign capital to finance and insurance, trade and logistics, e-commerce, after-sales service, and other sectors that are pivotal to its pillar manufacturing industries.

Besides, some foreign-back firms are also eligible for applying for funds that the Jiangsu government set aside to develop modern service industry.

As the test ground for China’s opening-up to foreign investment, the free trade zones are also preparing new measures. The FTZ in Guangdong is working on policies to open the financial service sector.

Sun Jiwen, the spokesman of the Ministry of Commerce, said absorbing foreign investment, as an important part of China’s opening-up policy, will benefit all parties.

According to data from the ministry, foreign direct investment totaled 341.1 billion yuan ($50.9 billion) in the first five months of this year, a year-on-year drop of 0.7 per-cent. During the same period, 12,159 internationally funded companies were established across the country, up 11.9 per-cent from the same period last year.




Nation should focus on key risk points, central bank warns

China should redouble its efforts to regulate key risk points in the financial sector to ensure financial stability, the central bank said on Tuesday.

While risks in the nation’s financial sector are manageable now, the central bank will elevate the importance of prevention, the People’s Bank of China said in its annual China Financial Stability Report released on Tuesday.

The bank and other financial regulatory bodies will work to fend off risks involved in shadow banking, real estate financing, local government financing platforms, internet financing and illegal fundraising activities, the report said.

Regulators will increase supervision over outbound investment and prevent shocks from external challenges, it said.

Recent improvements in economic data provide a solid foundation for the government to enhance its control of financial risks, said Shen Jianguang, chief economist of Mizuho Securities Asia Limited.

Since China’s economy finished strong in the first quarter, with 6.9 percent year-on-year growth, many experts believe the second quarter, which ended in June, is also likely to show high-rate growth, partly due to a recovery in the manufacturing sector.

Investment and a relatively loose macro environment have boosted the economy but also led to an accumulation of financial risks in sectors pumping up the economy. The pileup of debt has become a challenge in recent years.

“Risk points in the financial sector have not changed much compared with the same period last year. They have always been there. Strong economic growth means regulators have more space to deal with risks,” said Zhao Qingming, chief economist at the research institute of the China Financial Futures Exchange.

He said the risk level is not striking, but it is crucial to ensure that it will not threaten overall financial stability.

“The key is to implement financial reforms and to make sure regulatory rules can be rolled out in the right places,” he said.

Regulatory bodies have introduced a slew of measures to regulate risk points exposed in the financial sector since the start of this year.

The central bank has improved its regulation of shadow banking, often outside the government’s regulatory purview, by improving the Macro-Prudential Assessment framework.

By including banks’ off-the-balance-sheet wealth management products in its examination of broad credit, the central bank is able to curb risks brought by credit issued in restricted areas.

Some improvements have been made, according to a report released by Moody’s Investors Service on Tuesday.

Moody’s revised its outlook for banks in the Asia-Pacific region to stable from negative, as banking risks stabilized due to stable or improved operating conditions. China was a key factor in the increase of stable outlooks.




China, EU to come closer on climate change despite trade issues

Tensions on trade will not stop the European Commission coming closer to China after the US decided to quit the Paris Climate Agreement, an EU delegate told China Daily in an interview earlier this week.

A formal political declaration would be nice, but a failure to not issue a formal agreement will not hamper the effort to seek collaboration on climate change, said Vicky Pollard, environment and climate counselor of the EU delegation to China.

“The climate change is happening, and both sides are really committed to tackling it and its impacts,” she said. “We see further space to enhance cooperation to push implementation of the Paris agreement forward.”

During the EU-China summit held in June that was shadowed by US President Donald Trump’s decision to pull out of the Paris climate accord, top EU officials and Chinese Premier Li Keqiang agreed to develop more green technology, but failed to issue a joint statement on climate change.

Disputes such as the EU’s refusal of not granting China market economy status held back issuing a joint declaration on climate change.

Pollard said she was not very concerned about disputes on other matters such as trade.

“We will act and strengthen the ties not only because we feel we need to shoulder responsibilities, but also because we feel that there are many benefits from implementing the agreement,” she said. “Addressing climate change challenges will benefit longer-term development.”

The cornerstone of the partnership has been cooperation to support the establishment of a nationwide emissions trading system, developing green and sustainable energy, the development of low carbon cities, said Pollard.


Xi calls for more ways to help poor

During visits to farming villages, president offers residents hope

President Xi Jinping, while visiting a village in North China’s Shanxi province, called on Wednesday for greater efforts and more effective measures to help those living in poverty.

The people’s longing for a happy life is the goal that the Communist Party of China is striving for, Xi said during a stop in the village of Songjiagou, Kelan county, during his Shanxi inspection tour.

The village is newly built for local people who relocated from poverty-stricken homes nearby.

Xi also is general secretary of the CPC Central Committee. The committee is making efforts now to lead people from poverty and to get rich, and the people’s livelihoods will “rise joint by joint like sesame flowers on the stem,” the president said.

He called on the villagers to “roll up their sleeves and work on” following the steps of the CPC Central Committee.

During the tour, Xi also visited three families in the mountainous village of Zhao¬jiawa, which also is beset by poverty. Xi talked with villagers about the causes of their poverty and how to improve their incomes. He also went to the fields to inspect crops and check on the water in the village’s only well.

Xi recognized the local government’s efforts to relocate villagers from impoverished areas to newly built residences. He urged local authorities to take more measures to help poor people improve living conditions and raise their incomes.

In the village of Zhaojiawa, Xi held talks with civil servants who were dispatched from the Kelan county people’s congress for the village’s poverty-alleviation work. He encouraged the civil servants to have intensive contacts with villagers and help them out of poverty.

Noting that the CPC has dispatched a number of officials and teams to take charge of poverty relief at grassroots organizations in recent years, Xi said that the measures are effective for poverty alleviation. He encouraged the promotion of officials capable of poverty reduction.

The president has paid much attention to poverty reduction in recent years. In his New Year’s address, Xi said that what he cares most about is poor people.

The poverty reduction work requires tailored relief policies and precise measures, and sometimes patience and accuracy, like “doing embroidery”, Xi told lawmakers during the top legislature’s annual session in March.

Under a standard set in 2011, China categorizes individuals with an annual income less than 2,300 yuan ($334) as poverty-stricken. The CPC has promised to lift all those still living in poverty out of that status by the end of 2020.

The number of people living in poverty nationwide was reduced by 12.4 million last year to 43.35 million. The government will lift another 10 million people out of poverty this year, according to the Government Work Report.

During the inspection tour on Wednesday, Xi also visited a memorial hall in Xingxian county, Lyuliang, and presented flowers at the site for revolutionaries there.

At a former headquarters of a military command of the Communist Party of China during World War II, Xi urged the public not to forget the revolutionaries who contributed to the success of the revolution, the resistance against Japanese invaders during World War II, the founding of the People’s Republic of China, and the socialist revolution and construction.




Sharing economy gets lift

Li, State Council draft guidelines to encourage innovation in burgeoning sector

A guideline to further boost China’s sharing economy was approved on Wednesday at a State Council executive meeting chaired by Premier Li Keqiang.

Under the guideline, the growing sector will have easier access, greater policy transparency and better protection of legitimate rights for platform companies, resource providers and consumers. The guideline is aimed at creating an environment that enables and sustains innovation.

“We should give credit to the sharing economy as a reinvigorating force in China’s economic growth,” Li said.

The sharing economy includes areas such as bicycle-sharing services, car hailing services and even shared basketballs and phone chargers.

“The country’s sharing economy, enabled by the Internet Plus, has been instrumental in absorbing excess capacity and creating new jobs through its various new business models,” Li said.

China’s sharing economy is likely to sustain 40 percent annual growth momentum in the coming years, according to a February report by the State Information Center and the Internet Society of China.

According to the report, the market turnover of the country’s sharing economy in 2016 reached 3.45 trillion yuan ($505.4 billion), up 103 percent year-on-year.

In 2016, the sharing economy served about 600 million people in China. There were 5.85 million people who were on the payroll of sharing economy platforms, 850,000 more than in 2015, it said.

“The regulation of the sharing economy should be tolerant while prudent, as there is still much yet to be learned about new business models,” Li said. “We should avoid simply applying traditional methodology on the sharing economy.”

Going forward, authorities are being tasked with improving public services in terms of data sharing, government service procurement, urban planning and resources management innovation, the guideline said.

Financial institutions are being encouraged to provide innovative financial services and products tailored to the demand of companies in the sector.

The government also will get creative with taxation and other measures to facilitate the sector’s growth, especially in creating new jobs.

Companies with cutting edge products are being encouraged to go global, establish their presences and build brand names.

However, companies that improperly manage their businesses — including illegally disclosing or abusing the personal information of consumers and illegally competing in the market — will face the full weight of law, the State Council decided.

“China is a country vast in size and with diversified demands, still industrializing and urbanizing. There are a lot of resources and capacities that could be put to better uses,” Li said.

“Government at different levels should take the initiative with the big picture in mind, striking a balance between ‘enabling’ regulation and risk preparedness, in our effort to build a level playing field for all to compete and excel.”

According to the February report, the sharing economy has covered areas such as transportation, housing, medical services and manufacturing. Its integration with the real economy has been accelerated, as the sharing model helps eliminate outdated production capacities, expand effective supplies and move traditional industries to high-end industries, the report said.




Slowing growth could mean the birth of a bottom-up bull market in China

In the context of China’s ongoing structural transition, the withdrawal of liquidity by the People’s Bank of China (PBOC) has significant implications for markets. Over the coming months, we expect headwinds for deep cyclical, China-facing stocks across the Emerging Markets (EM) complex. We believe that this is likely to lead to a reduction in passive flows to EM, creating additional opportunities for skilled bottom-up stock-pickers to generate alpha. This article considers some of the ways active investors can play a cyclical Chinese economy through key areas of focus: slowing growth, higher costs of capital and a changing regulatory landscape.

Headwinds for miners, tailwinds for alpha-seekers

We believe that there are clear reasons why the current backdrop may support investors’ search for alpha, while posing problems for cyclically-exposed companies. First, China’s slowing growth means that its property boom (and demand for global metals) is likely to cool. While headlines might suggest that US President Trump’s infrastructure expenditure should support global metal prices, the reality is that Chinese consumption accounts for almost seven times more copper demand due to its urbanization and infrastructure development than the US, so China’s slowdown is a significant risk here.

Second, we expect to see fewer passive inflows to EM, given the decreasing tailwinds driving cyclical sectors. Indeed, we have seen significant flows into EM assets in recent years, but there is a meaningful relationship between the performance of EM cyclical sectors and positive inflows to EM equity ETFs. Our team analyzed a 5-year period in which a correlation emerged between the outperformance of EM cyclical sectors and inflows to the world’s three largest EM ETFs: the correlation was 48 percent across the period, rising to 93percent for the last 2 years. As we expect headwinds for cyclical sectors, it’s possible that beta-driven markets may give way to rich opportunities for alpha generation, amid what we believe are structurally cheap valuations on EM equities and currencies.

The third reason why this backdrop may be supportive of stock-pickers is that lower GDP growth presents opportunities for higher returns on capital, thanks in part to the necessity of an improving regulatory framework. It’s easy enough to make money when economic growth is exploding. Between 2010 and 2012, when Chinese nominal GDP growth accelerated from around 11 percent to almost 25 percent, Chinese onshore equities compounded negative returns of over 12 percent annually, where the explosion of new fixed capital contributed handsomely to growth. But from a corporate perspective, excess capacity creates deflation and diminishes margins, and an artificially low cost of capital reduces incentive for management to make proper returns. This was the era of such projects as the 90-day-to-build, 220-story pre-fabricated ‘world’s tallest building’ in the Chinese countryside; a 3-year period in which China consumed more cement than the US did in the entire 20th century. Now, Beijing has encouraged supply-side rationalization of material sectors, such as coal, steel, aluminum, in order to lift returns, which has been successful. For example, Baoshan Iron & Steel, China’s biggest steelmaker doubled its returns last year.

However, there are other less high-profile areas that have also benefitted from this rationalization, such as electric and hybrid buses. China had previously offered generous subsidies to encourage the adoption of ‘green’ buses, meaning all players in the sector could make a return, irrespective of product quality or efficiency. But now, Beijing has changed this regime to foster greater efficiency and reduce corruption. Following a one-off hit to pricing in 2017, we expect three market leaders to gain market share and pricing power.

Alpha Opportunities in Emerging Markets

Ultimately, we believe that the headwinds facing cyclically-exposed companies may present opportunities for stock-pickers, and that the changing landscape in China should radically differentiate winners from losers, with huge scope for incremental market share and returns for the winners: a backdrop that can foster a true bull market in stock-picking in China. We believe that A-shares are one of the most liquid, inefficient opportunities in global financial markets, virtually untouched by foreign investors and on the cusp of a revolution in returns on capital. MSCI’s recent decision to revisit index inclusion may well be coming at a time when the bottom-up story in China is getting far more interesting.




Zone gives rise to science, growth

Editor’s note: In the run-up to the 19th Communist Party of China National Congress, China Daily will report on a number of key projects of national importance that showcase the country’s great improvements in crucial fields, such as technology and innovation.

A small county in East China shows that size has no bearing on economic growth

Decades ago, Jiashan county was primarily known for its agriculture and wood industries. It also has a reputation for making quality yellow wine whose sweetness makes it distinctly different from those made elsewhere in China.

However, the county’s business landscape was transformed in 1993, when the Jiashan Economic and Technological Development Zone was founded to drive growth. Science and technology have since become the cornerstones of the county’s success.

In 2013, Jiashan, in the eastern province of Zhejiang, was singled out as China’s only county-level demonstration zone for scientific development, and today its key industries include precision machinery and electronics.

On Sunday, President Xi Jinping said county-level governance is crucial to the modernization of the national system of governance, and Jiashan has taken full advantage of its location and set up a good example for scientific development, according to reports on China Central Television.

Xi visited Jiashan in 2004 and 2005, when he was Party chief of Zhejiang, and he paid another visit in 2008 when he was vice-president.

Developmental pillars

One of the pillars of Jiashan’s economic development is automation. According to official data, the county has spent 20 billion yuan ($3 billion) to help 450 companies implement automation initiatives during the past three years, resulting in productivity rising by 12.3 percent.

The high-tech manufacturing sector has also been identified as a major player in the county’s development plans.

Jiaxing Join Intelligent Equipment Co is a good example of the sector. Founded in 2009, the company supplies state-of-the-art precision equipment to semiconductor manufacturers around the world.

Strong government support enabled the company to grow from a five-man operation to a 110-person-strong enterprise, according to Chen Yilun, general manager of Join Intelligent’s machine vision business unit.

An employee works on the production line at Jiaxing Join Intelligent Equipment Co. Photo/China Daily

“We were looking for a place suitable for manufacturing, but large cities just didn’t have the sort of space required. We also wanted to be close to a large city to attract talent,” said Chen, explaining the company’s decision to base itself in Jiashan.

The county, which has a population of 750,000, is a 20-minute ride on a high-speed train from Shanghai, its bustling neighbor, and less than 100 km from other major business hubs such as Suzhou in Jiangsu province, and Hangzhou and Ningbo in Zhejiang province.

“The government provided us with very good service support in every aspect. It put us through an incubation program and helped to coordinate many things necessary for the company’s operations, including the construction of the facility,” added Chen, who studied in the United States.

European ties

Another project aimed at attracting investment is the Sino-Dutch Industrial Cooperation Park, located in the Jiashan Economic and Technological Development Zone. Officially opened in May last year, the park provides a platform for companies from China and the Netherlands to cooperate in matters related to investment, trade, education, training and financial services.

“Much of the county’s overseas investment used to come from Taiwan, but we’re now looking to bring in more from Europe,” said Wang Yuqing, the zone’s deputy director.

“Despite its name, the park does not just facilitate bilateral trade between China and the Netherlands. This zone can also be used as a stepping stone for Chinese businesses to enter the European market and vice versa.”

Several large companies from the Netherlands have set up shop in Jiashan, including the brewer Heineken, which invested more than $100 million to build a factory in 2014, and chemicals producer Akzo Nobel.

Having identified a growing demand for paints and coatings by China’s thriving wood coatings and furniture sector, especially in the area around the Yangtze River Delta, Akzo Nobel opened a manufacturing plant in Jiashan in 2003.

George Sun, the site manager at the Jiashan facility, listed a number of factors behind the company’s decision to establish a presence in the county.

“Jiashan is located near Shanghai, which means top talent is easily accessible. Furthermore, the cost here is still considered very reasonable when compared with the surrounding major cities,” he said.

“I have dealt with officials from several governments in the region, but those in Jiashan are very different in the sense that they are incredibly service oriented. They are always coming to the site to find out what we need to grow.”

20170620002People watch a road show at the Jiashan Economic and Technological Development Zone. Photo/China Daily

Attracting talent

The county has also identified foreign talent and investment as another pillar of growth. According to Shen Xuelin, director of the Jiashan county bureau of commerce, the county attracted as much as $300 million in foreign investment last year, and is currently home to 10 of the world’s top 500 companies. Some of the big names located in the development zone include Berkshire Hathaway, Goldman Sachs, Foxconn and Pegatron Corp.

In March, Jiashan introduced a raft of new policies to attract talent, among which was 100 million yuan ($14.6 million) in funding for programs led by top talent.

The Shanghai Overseas Returned Scholars Association and the Jiashan government also organized a competition for startups in electronic information and healthcare, with the winners walking away with prizes worth as much as 150,000 yuan. Winning startups that registered their businesses in the county were also given subsidies amounting to as much as 6 million yuan.

The county’s efforts to attract foreign talent and overseas returnees also included spending 20 million yuan on building apartments, subsidizing living and education for school students, and improving air quality through pollution-control measures.

These policies have attracted entrepreneurs from Taiwan. Monry Ho is an example of how Taiwan residents have thrived in the county. Having first arrived in Jiashan 17 years ago, Ho now owns several companies, including a motor components factory and a precision-forging facility.

“At that time, many of my friends recommended that I come to Jiashan because they knew the local government was providing strong support to overseas investors. There were fewer than 10 companies from Taiwan when I first arrived,” he said.

Official records show that Jiashan is the most prolific Taiwan investment zone in Zhejiang, with more than 2,000 Taiwan residents owning about 500 companies.

In line with the county’s drive toward innovation and sustainability, Ho has been steadily upgrading his factories since 2015, replacing old machines with semi- or fully-automatic versions. He has also replaced the air-conditioning systems in his facilities with a high-tech geothermal pump, a heating-and-cooling system that transfers heat to or from the earth.

“The pump has helped my businesses to reduce emissions and electricity consumption. It was expensive to install, but it is greener and will help with cost savings in the long run. Automation and innovation allow us to be more efficient. Without new technology, a company cannot possibly develop and be competitive in the market,” he said.

A large number of people from Taiwan who live in Jiashan come from the younger generation. Li Guofei, whose family hails from Kaohsiung in Taiwan and owns the World Expo Hotel in Jiashan, decided to expand the business by opening a boutique hotel called the Nine House.

Situated in the county’s Xitang Ancient Town, the modern bed-and-breakfast establishment has been featured in design websites and magazines in the United States and South Korea. Li plans to introduce more such boutique hotels to the countryside and urban areas in the future.

A sweet experience

The establishment of Li’s boutique hotel came on the back of the local government’s push to use tourism as another catalyst for economic growth.

Last year, when the Nine House opened, Jiashan’s Dayun town was one of the first locations in Zhejiang to be designated as a demonstration zone for tourism development. The town’s two largest tourist magnets are the Yunlan Bay Hot Springs and Aficion, a chocolate factory that takes visitors through a tour of its production process and the history of chocolate.

According to official statistics, the county received more than 13 million tourists from around the world last year-a rise of 45 percent from 2015-and generated 15 billion yuan in revenue. The local government expects tourism revenue to hit 30 billion yuan by 2020.

“The chocolate factory is at the core of our tourism strategy, which is based on the concept of sweetness. This core is supported by other segments such as our flower trade, hot springs and wedding photography. We aim to provide tourists with a sweet travel experience,” said Lu Yun, the secretary of the Party committee of Dayun town.

“Looking forward, the government will continue to provide strong support to tourism enterprises in the town to provide visitors with a greater selection of travel services and products. We don’t want to be just a provincial-level tourist destination-we want to become a national travel hotspot.”

Cao Chen contributed to this story




Reform will ‘free hands’ of businesses

Some pre-manufacture product licenses replaced by safety checks

China is cutting the number of products whose manufacture requires official licensing, the State Council decided at an executive meeting chaired by Premier Li Keqiang on Wednesday.

Nineteen categories of products, including water pipes and rechargeable batteries, will no longer need manufacturing licenses. The licenses required for electric blankets and motorcycle helmets will be replaced by the post-manufacture China Compulsory Certification, or safety certification, it was decided.

Industry is the pillar of the real economy, Li said. The existing licensing system needs a thorough overhaul and a major streamlining, keeping a tight list of product categories that do need to follow the current practice and also speeding up the transition to product certification, he said.

“We need to free the hands of businesses for innovation and operation. It is pivotal to the upgrading of the real economy,” he said.

The production licensing system was introduced in 1984 for quality supervision. Companies must obtain a license before their products go into production. The number of categories of products that require official licensing had since been reduced from 487 to the current 60, and now to 41.

At a news conference in March, Li said that the government should send a resounding “yes” to all law-abiding market entities and give the green light to all hardworking entrepreneurs and innovators. Violators of laws and regulations must be warned, he said, and when necessary barred from the market.

“Having fewer licensing requirements doesn’t mean less responsibility. On the contrary, they now have a greater responsibility to the consumers,” Li said at the meeting on Wednesday.

The new system will also pose higher requirements on enterprises to ensure the quality of products.

The government departments concerned should further step up compliance oversight and waste no time in developing compulsory certification standards, he added.

“There should be no overlap, though,” he said. The General Administration of Quality Supervision, Inspection and Quarantine, China’s quality watchdog, will delegate the licensing authority of another eight categories of products, including feed grinders, to provincial-level quality supervision departments, the meeting decided.

China will also pilot a reform to streamline procedures for manufacturing license applications in some areas and industries. Companies can present a qualification report conducted by an eligible agency instead of going through pre-licensing production inspection.

Government departments can conduct on-the-scene inspections of companies after, rather than before, they have obtained the manufacturing license, to enable companies to start their production in a timely manner. The quality watchdogs will also step up compliance oversight through spot checks after the issuance of licenses to ensure the quality of products.




‘Silk Road in the air’ links to Luxembourg

China supports building a Silk Road in the air between Luxembourg and Zhengzhou, capital of Henan province, President Xi Jinping said on Wednesday.

The two countries should deepen cooperation in finance and production capacity within the framework of building the Belt and Road, Xi said when meeting with visiting Luxembourg Prime Minister Xavier Bettel in Beijing on Wednesday

The airfreight industry has been a highlight of Bettel’s official visit to China, which started on Sunday. His country already serves as a key partner of China for financial services in Europe.

Observers said there is huge potential for cooperation in air transportation when countries, particularly European countries, are helping build the Belt and Road with China.

On Monday, Bettel and Premier Li Keqiang witnessed the signing of a joint investment deal involving airline freight shipping companies from Luxembourg and Henan province.

Xi said the two countries should nurture new highlights of cooperation, including shipping by air, high and leading technologies, and green economy to achieve greater mutual benefits.

Also, the two countries should strengthen exchanges in culture, education and sports and facilitate travel, Xi said.

Bettel said the two countries have strong economic complementarity, and his country is ready to expand cooperation in areas including finance, investment, science and technology, tourism and cultural exchanges. Luxembourg is also ready to boost cooperation within the framework of the Belt and Road Initiative, he said.

On Tuesday, Bettel visited the Zhengzhou airport. Zhengzhou has seen booming cooperation with Luxembourg in sectors including tourism, air transportation and railway shipping.

Since airfreight operations between the two started in 2014, shipments to and from Luxembourg have accounted for nearly a fourth of Zhengzhou airport’s total cargo shipments, according to the Henan Daily newspaper.

Wang Yiwei, professor at the School of International Studies of Renmin University of China, said China’s support for the Silk Road in the air “showcases Luxembourg’s ambition, foresight and quick action to grasp the new opportunities”.

“Both Luxembourg and Zhengzhou are key hubs that link the airways and railways meeting there, and such great infrastructure is ideal for building a Silk Road in the air,” Wang said.

The Silk Road in the air also will boost the development of Central China, Wang added.