Decoupling move streamlines start of new firms’ operations
China will decouple business licenses and operating permits – both required for starting a business – as part of a nationwide policy rollout starting in November.
The directive emerged from the executive meeting of the State Council chaired by Premier Li Keqiang on Wednesday.
The country will also further reduce production permits for industrial goods by more than one-third to ease corporate burdens.
It was determined in the meeting that introducing the decoupling nationwide will help improve the business environment, energize the market and catalyze stronger development. The reform was piloted in late 2015 in Shanghai’s Pudong New Area, targeting 116 administrative approvals.
“Decoupling business licenses and operating permits is the right way to go, as it meets both corporate and public needs. It is a necessary part of the reform of our market economy system, and a step we must take,” Li said.
Starting on Nov 10, fewer permits and certificates will be required after a company receives a business license. The streamlining will apply nationwide to the first batch of some 100 business-related government approval items – meaning that companies can begin doing business as soon as they get their business licenses. They won’t need to secure operating permits unless necessary.
Items that are no longer necessary for administrative approval or which are eligible for self-improvement through market forces will either become approval-free or will require registration only.
A market entity will be approved for business activity when it commits to complying with all permitting requirements. A company violating this commitment will have its license revoked and face heavy penalties. This practice will apply to those government review items that need to remain, and any noncompliance with the permitting requirements can be redressed through government oversight.
“It is important to put greater emphasis on implementing new, intensified efforts for compliance oversight while easing market access in advancing the reform of decoupling business licenses and operating permits, and to enhance fair supervision,” Li said.
Another decision was the cancellation of production permits for 14 types of industrial goods. Production permits for goods relating to public security, public health and environmental protection will be replaced by mandatory certification. A list of products will be compiled and released to the public.
“This reform of decoupling business licenses and operating permits should be well-paced, as realities differ across the country. The reform may move faster in places where conditions are fully in place, yet no one-size-fits-all approach should be applied,” Li said. “This is another test of our ability to govern.”
