Zhang Xiaoqiang, vice-chairman of the National Development & Reform Commission, said the reform would be implemented next year if it is approved quickly by the State Council, or cabinet. “The basic direction of the proposal is that companies will no longer have to go through government review and approval for investments that do not involve government money,” Mr Zhang said in an interview with the Financial Times.
The reform would be a milestone both in the government’s abandonment of the tools of the planned economy and in its efforts to create a market-oriented environment.
Analysts said they also offered hope that the time-consuming and burdensome investment process could be speeded up and simplified for both foreign and domestic enterprises.
Lester Ross, a lawyer with Paul, Weiss, Rifkind, Wharton and Garrison in Beijing, said the commission’s plans would be a boon for companies queueing up to join the tide of foreign dir ect investment that has flowed into China in recent years. “This would be a great improvement for applicants,” he said. “The necessity of going to the central government adds months and months on to the project approval process. Even at the local levels it adds quite a bit of time.”
Mr Zhang said companies would be able to carry out new investments as long as they did not conflict with any law or regulation. “Where the enterprise uses its own money and the [proje ct] is not considered major or in a sector subject to state restrictions, then all they have to do is register, say ‘I want to invest’, and that’s enough,” he said.
Where projects were seen as large-scale or were in restricted sectors, companies could still expect a much more straightforward procedure for getting government approval than in the p ast, Mr Zhang said. Any review would focus only on “external factors” such as environmental impact, land use and “economic security”.
Mr Zhang added: “We used to investigate what your production capacity was, what equipment you used, your return on investment, the location of your market. Now these things will be enti rely your responsibility.”
Under the reform, “major” projects would be defined differently in each industry, but the government is leaning toward a simple investment-value criterion for investments by foreign g roups.
Today, most foreign investments over $30m require central government approval, though Mr Zhang said he personally felt that level should be raised.