2013.12.23 FENG, Rui、LIU Yan、Mark H. Chu
On November 8, 2013, China’s State Council published a decision (“Decision No. 44”) to further remove the administrative approval requirements or delegate its power of administrative approval in respect of sixty-eight types of undertakings. Decision No. 44 also proposed to remove or delegate the power of approval of another seven items that require administrative approval established by relevant National People’s Congress (NPC) laws. Approval required for seventeen items established by NPC laws and previously proposed to be surrendered to the market or delegated to lower levels are also published in Decision No. 44 following the amendment of relevant laws by the Standing Committee of NPC.
No. 44 is the third decision related to the delegation of power issued by the State Council in 2013 following its unveiling of the plan for reform and transformation of government functions. The State Council has issued two separate decisions, Decision No. 19 and Decision No. 20 on May 15, 2013 and July 13, 2013 respectively, to delegate the government’s power of approval or cancel administrative approval items.
The leadership of China newly on board since last year has taken active steps to reduce the government’s direct intervention in the economic activities and let the market play a decisive role in the resource distribution. Publication of Decision No. 44 is clearly a further action toward this end. Below are key sectors or industries which are covered by Decision No. 44 and notable to foreign investors.
i. Environment Protection
According to Measures for Administration of Hazardous Waste Operation Permits promulgated on May 30, 2004, enterprises engaged in the following activities (excluding centralized disposal of medical wastes) should file their applications for comprehensive operation permit for collection, storage and disposal of hazardous wastes with the PRC Ministry of Environment Protection (“MEP”):
(1) incinerating 10,000 tons or more of hazardous waste per year;
(2) disposal of hazardous waste containing polychlorinated biphenyl, mercury or other substances seriously threatening the environment and human health; or
(3) disposal of hazardous wastes by the comprehensive centralized disposal facilities listed in the State’s construction planning for hazardous waste disposing facilities.
Decision No. 44 delegated such power of approval of MEP to its provincial counterparts.
To further streamline the administration by MEP, MEP issued the Announcement of MEP to Delegate Power of Approval of Environment Impact Assessment Documents for Certain Construction Projects on December 15, 2013. Pursuant to such Announcement, the power of approval for environment impact assessment documents for encouraged and permitted projects with total investments (including a capital increase) of USD100 million or more as set forth in the Guiding Catalogue for Foreign-Invested Industries has been entirely delegated to the provincial levels, while previously such power of approval was exercised by MEP for certain projects and by its provincial counterparts for the others.
ii. Foreign investment in Road Transport Industry
According to Decision No. 44, the power of project approval of foreign investment in road transportation industry is delegated to the transport administrative authority of provincial level.
iii. Establishment of Foreign Chamber of Commerce
Establishment of a foreign chamber of commerce in China by foreign commercial establishments and personnel within the Chinese territory will no longer require the approval of MOFCOM.
iv. Culture and Entertainment
The PRC Ministry of Culture is delegating its power of approval to the provincial level on the establishment of show brokers and agencies and the operators of theaters and other venues of show/performance by investors from Hong Kong and Macao. If the investors are from Taiwan, the power delegation will only apply to the establishment of above entities by taking the forms of Sino-foreign joint ventures. In the case of WFOE, the approval authority remains vesting at the Ministry of Culture of central government level.
v. Tax Registration
Decision No. 44 removes the requirement for the approval for tax registration in relation to initial registration and relevant modification, inspection and replacement of the tax registration certificate. Such power of approval was previously vested at the State Administration of Taxation and in practice implemented by the tax authorities at various levels.
vi. Civil Air Transport
Pursuant to Decision No. 44, establishment of an enterprise engaged in the printing of civil air transport certificate, i.e., luggage tickets, air waybills, etc., is no longer subject to the approval of Civil Aviation Administration of China or the competent authority of civil aviation at any level.
vii. Registration of Association
Registration or changes of registration of a branch or representative office of a nationwide association or de-registration of such branch or representative office no longer needs the approval of the Ministry of Civil Affairs.
