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Notions Concerning Accelerating the Growth of the Non-State-Owend Economy

NOTIONS CONCERNING ACCELERATING THE GROWTH OF THE NON-STATE-OWEND ECONOMY

2006-11-14 11:28:00

YUNNAN PROVINCIAL COMMITTEE OF
THE COMMUNIST PARTY OF CHINA

THE PEOPLE'S GOVERNMENT OF YUNNAN PROVINCE

NOTIONS CONCERNING ACCELERATING THE GROWTH OF
THE NON-STATE-OWNED ECONOMY

(18th April 2003)

Notions are proposed as follows in order to fully implement the guidelines made in the 16th National Congress of the Communist Party of China and the 7th Congress of the CPC's Committee of Yunnan Province, to grasp opportunities and concentrate all efforts on resolving key problems in the growth of the non-state-owned economy in Yunnan Province, promoting the non-state-owned economy to a new level, and pushing forward the construction of the "all-round well-off society" in Yunnan.

1. The non-state-owned economy should be unswervingly promoted.

(1) Enhancing understanding and awareness
Various types of the non-state-owned economy such as self-employed business and individuals-owned business are important components of the socialist market economy and active elements of economy that are compatible with the level of productivity at the current stage. To accelerate the growth of the non-state-owned economy is the requirement to improve the basic socialist economic institution and to quickly increase productivity. And it is of profound significance in readjusting the structure of ownership, encouraging growth in new areas of economy, further opening up to the outside and increasing employment. Without great development of the non-state-owned economy, there will be no great development of the whole economy of Yunnan and if without the fast growth of a big number of non-state-owned enterprises (hereinafter referred to as NSOEs), there will be lack of vigor and vitality in Yunnan's economy. To develop the non-state-owned economy is to treat development as the top priority and to give a full play to all creative activities. Under the guidance of the "Three Represents", our understanding and awareness as well as our sense of responsibility should be further enhanced so as to be of one mind in taking effective measures for the development of the non-state-owned economy as an important strategy for the overall construction of the "well-off society".

(2) Sparing no efforts in creating good conditions for the growth of the non-state-owned economy.
To accelerate the growth of the non-state-owned economy, people's thinking must be further emancipated and it should be advocated to keep up with the changes of time. To the same end, the level of people's understanding should be raised, more flexible policies adopted, the scope of business accessible to the non-state-owned economy expanded, the capping on its scale of business lifted, mechanisms involving its operation rejuvenated, and political trust on this economic sector boosted. The national treatment principle should be carried into effect. All thoughts, mechanisms, policies, laws and regulations that are obstacles to the growth of the non-state-owned economy or all practices that are incompatible with development should be abandoned. Endeavors must be made to build an excellent environment for NSOEs and their employees, whereas they can enjoy legal protection, social position, political reputation and economic rewards as well as fair competition and common progress with state-owned or collective enterprises. These steps would serve to ensure a breakthrough in the development of the non-state-owned economy.

2. Market access and areas for investment should be broadened.

(3) Enforcing examination and approval by law

Unless required by national laws and administrative decrees and regulations, no departments or local authorities are allowed to set previews in advance to examination or approval procedures for establishing NSOEs. Department regulations and industry or trade rules should not be admitted as preconditions for the previews. In cases where previews are necessary, the scope of trades or products must be re-publicized. Procedures for examination must be made known to the public and be as much simplified as possible. Service mode such as the "One-Window Model" or "One-Stop-Shop" should be adopted so as to enhance efficiency.

(4) Reducing the cost for establishing businesses

The limitation on registration capital for NSOEs should be lowered. In the event that NSOEs are not able to pay the registration capital fully at one time, they shall be allowed to pay in installments and the first installment may be as little as 10% of the full registration capital. Intangible assets, such as labor capital (management ability or technical specialty) and intellectual achievements (invention, patent, or technical accomplishment) may be contributed as investment upon appraisal by qualified licensed agencies. Efforts shall be made to review all fee-chargeable items. No extra fees shall be charged at registration except for the net cost of registration and other legitimate fees. The registration of a group enterprise composed of NSOEs should be approved providing the registration capital of the parent company reaches 5 million Yuan and it has at least three subsidiary companies, with the total registration capital of both the parent and subsidiary companies reaching 10 million Yuan.

(5) Standardizing access of trades

NSOEs are allowed to engage in all trade areas and products that are in accordance with the state laws and administrative decrees and regulations and are not in violation of the industry policy. NSOEs are encouraged to invest in areas such as education, medicine, health care and sports or to take part in the comprehensive exploration of rural development, agri-business and infrastructure including energy, transportation and water conservation etc. or the investment in and operation of urban facilities. All trade and investment areas that are open to the outside world are open to NSOEs as well. It is no longer necessary for NSOEs to obtain approvals if they invest in ordinary infrastructure with their own funds and commercial bank loans, for those projects whose total investment exceeds the limitation for funds, records shall be filed with the competent authorities.

(6) Lowering qualification conditions for obtaining import and export right

Relevant authorities shall timely process import and export right for NSOEs complying with national standard, and enable them to enjoy the state credit & loan and tax refund policy for export business. For NSOEs applying for foreign trade right, as long as they are in a commodities production industry and has 500,000 Yuan as registration capital, the application shall be approved. And they may enjoy the same treatment as state-owned enterprises in such aspects as foreign trade and economic cooperation, tax refund, quota allocation, grant of the Fund for Promoting Foreign Trade, overseas investigation and business tours, financing with tax return account as guarantee, and so forth.

3. Preferential policies on taxes and charges should be adopted to encourage the development of non-state-owned economy.

(7) Implementing preferential policies on taxes

The threshold of value-added tax on self-employed business and other individuals shall be elevated: for sales of goods, the original monthly sales of 2,000 Yuan is hence raised to 5,000 Yuan; for labor service, the original monthly sales of 800 Yuan as the taxable amount is hence raised to 3,000 Yuan; for tax payment upon times, the original one time 80 Yuan as the taxable amount is hence raised to 200 Yuan. Business income tax on newly-established enterprises, key and leading agri-business enterprises and NSOEs formed through mergers or purchase of state-owned or collective businesses shall be exempted in the first 3 years after the business is established. And between the year of the end of tax exemption and the year 2010, the rate of business income tax shall be reduced to 15%. For enterprises whose capital comes from other provinces, if 51% of their registration capital originates from other provinces, or if the investment amount from other provinces exceeds 5 million Yuan, they may enjoy the preferential policies as granted by Yunnan Province for foreign investors. For organizations that provide guarantee services to NSOEs whose service charge is 50% lower than the current corresponding interest rate of bank loans and whose incomes from guarantee service exceed 50% of its gross income, their business income tax shall be exempted in the first 3 years since its operation and between the year of the end of tax exemption and the year 2010, the rate of business income tax shall be reduced to 15%. All expenditures on research and development of new products, new technologies and techniques shall be deducted before the imposition of income tax. Donations by NSOEs given to non-profit organizations or government institutions for usage in education, civil affairs, poverty alleviation, charity, disaster relief, the "Hope Project" and "Bright Project" shall be deducted before the imposition of income tax.

(8) Implementing preferential policies on charges and fees

NSOEs may enjoy the same preferential policies on charges and fees as granted for state-owned or collective businesses. For those merging with or purchasing state-owned or collective businesses, they may enjoy the provincial preferential policies on charges that are introduced to deepen the reform of state-owned businesses. In the event that NSOEs need to obtain land-use right by means of compensation as assignment, except for commercial purposes, the compensation may be charged at 20% of the appraised value of the land. If the compensation can be paid within 60 days, the enterprise may have a discount of 30%. If the compensation is paid in installments, the enterprise may pay 25% within 60 days and pay the rest within 5 years.

For NSOEs who pay compensation to exploit un-utilized land owned by the state or the collective to develop forestry, plantation, aquaculture and their auxiliary facilities, the compensation for land-use right as assignment, contracting fee, or leasing fee in the first 5 years from the date when the contract is signed shall be returned to the enterprises. All administrative charges shall be exempted in new markets funded by any NSOE in the first year from the date of its operation. For operators starting business in newly established markets, all administrative charges shall be exempted in the first 2 years.

(9) Fully implementing all preferential policies

Taxation authorities shall seriously and fully implement all preferential policies made by the state and the province. Tax reduction and exemption applications must be processed and granted within regulated time limits if conditions for enjoying the policies are satisfied. For self-employed businesses and individual-owned enterprises that should be taxed upon ratification, the tax amount shall be ratified in accordance with the principle of justice and equality. All government departments shall strictly implement relevant preferential policies to provide quality service to enterprises and business operators.

4. Funding support should be enhanced.

(10) Supplementing special support funds

Within the following 3 years from 2003, 100 million Yuan per year shall be appropriated from the provincial revenues to boost the Special Support Fund for NSOEs (previously known as the Special Support Fund for Self-Employed and Individual-Owned Economy). Finance departments at different levels in all regions (prefectures and municipalities) and counties (county-level cities and districts) shall also arrange some special support fund year by year and list it in their budgets. The Special Support Fund shall be mainly used to build up a credit and guarantee system, to support the construction of economic zones for NSOEs and to provide loan interest discount for high-tech industrialization projects and key projects. Regulations for fund usage shall be made and strictly obeyed to ensure proper operation.

(11) Building up a credit and guarantee system

By 2004, a basic framework of credit and guarantee system for NSOEs and small and medium-size businesses shall be established in the province. The registration capital of guarantee companies shall be lowered. Guarantee companies to be registered at the province, prefecture and county level shall be required to install only a registration capital of 20 million Yuan, 10 million Yuan and 5 million Yuan respectively. In all regions (prefectures and prefecture level cities) and counties (cities and districts) which meet the necessary conditions, policy guarantee institutions or commercial guarantee companies shall be set up. All social groups, industrial associations and individuals are encouraged to invest in the establishment of diversified guarantee units at various levels. Enterprises are encouraged to provide all sorts of mutual aid guarantee for financing purposes. Guarantee institutions formed by social groups shall be registered as juridical associations at the civil affairs authorities. All guarantee institutions shall establish a scientific risk control mechanism and compensation system. Administrative policies and regulations on ownership of land and plants and property transfer in enterprises shall be improved so as to effectively overcome the long-lasting difficulties in applying for loans and to solve the problem of incoherent policies. All mortgage and ownership registration fees involved in enterprise loan shall be charged at the lowest rate.

(12) Improving financial service

Financial institutions shall provide more loans to enterprises with salable products, high returns and good credit, develop new financing products that promote the development of NSOEs, and actively try out various projects, such as lending on guarantee of bonded warehouses, on guarantee of tax refund account, on chattel mortgage, on guarantee of account receivable and on partial mortgage, and expanding promissory note business. Qualified NSOEs are encouraged to establish investment arms. A database of credit information of NSOEs shall be set up to provide systematic and public reference, exchange and share of credit information.

(13) Expanding direct financing

NSOEs are encouraged to reorganize state-and collective-owned businesses, merge with or purchase businesses of different ownership in different regions and countries, and restructure state-and collective-owned businesses through introducing foreign capital, or financing by way of equipment and plants leasing and pawning. Qualified NSOEs are encouraged to become listed companies to raise funds. Support shall be given to enterprises that reorganize listed companies within the province, in various aspects including fees exemption or reduction, liabilities rearrangement, good assets injection and settlement of redundant employees. All competent authorities shall assist qualified NSOEs in their application for all kinds of policy and financing support, such as the State Fund with Interest Discount, State R&D Fund for Technology Projects, Special Fund for the Modernization of Traditional Chinese Herb Medicine Industry (the Yunnan Base), Innovation Fund for Medium and Small Businesses as well as loans from foreign governments and international financial organizations.

5. Land use for enterprises should be ensured.

(14) Meeting the need for land use
Land demand by NSOEs shall be integrated into local plans for land exploitation and annual use plans. Enterprises' reasonable land use demand for their establishment, rebuilding and expansion shall be satisfied. The same land use approval procedures as for state-and collective-owned businesses shall apply to NSOEs. Based on local conditions, all regions (prefectures and cities) and counties (county-level cities and districts) may create NSOEs' zone, however, low-level and redundant construction shall be avoided.

(15) Lowering cost of land use
For land-use right obtained by means of compensation as assignment, for commercial use such as real estate projects, enterprises shall obtain the land-use right through bidding, auction, or public transfer; for such use as investment projects encouraged by the state and the province, local governments may make preferential policies regarding compensation for land-use right and other charges. Land to be used for public welfare such as urban infrastructure, science and technology, education, culture and medical facilities, which are listed in the "Ministry of Land Resources: Land Allocation List" (G.T.Z.F. [2001] No.9), shall be supplied through allocation. In economic zones, all charges deriving from land-use right may be kept in the zones for their infrastructure construction within the first 5 years from the date such zones are established upon approval. In economic zones land-use cost can be lowered through compensation paid by installments or reduction or exemption of leasing fees.

(16) Simplifying the approval procedures of land use
Land administrative authorities at all levels must decide within 5 working days whether or not to process application for land and land-use right submitted by NSOEs; for those complying with the set requirements, the examination and approval procedure should be completed within 15 working days; for those that have obtained land-use right and are filing for registration, the registration and certificate grant must be completed within 30 working days.

6. The development of export-oriented enterprises with a leading technical edge should be accelerated.

(17) Promoting investment with intangible assets
When an enterprise set up by research institutes or institutes of higher learning is transformed into a non-state-owned technical entity where intellectual achievements are incorporated, apart from continuously enjoying relevant preferential policies during the interim, the new corporation may reward the individuals who own such intellectual achievements with at least a 20% share of the appraised value of the said intellectual properties, and may divide a part no higher than 15% of net assets as initial shares and award them to founding members and key management personnel of the enterprise.

(18) Encouraging technological innovation
NSOEs listed as key enterprises in the province may enjoy loan interest discount financed by the Special Support Fund when they are engaged in developing new products, technical innovation projects or high-tech industrialization projects, which comply with relevant industrial policies of the state and the province. Projects launched by NSOEs, which boast intellectual properties and good marketing prospects can be included in the projects that enjoy the support of the province's special funding such as the Provincial Scientific Development Plan Fund and Technical Renovation Loan Interest Discounts Fund.

(19) Cultivating famous brands
As of 2003, the provincial government shall confer a one-time award to NSOEs whose products are qualified as "Well-known Trademarks of China" or "Famous Brands of China", or are listed among the most famous export commodities identified by the state foreign trade authority. For those qualified as the well-known trademarks or famous brands of the province, one-time awards are to be granted to the enterprises by local governments.

(20) Developing export-oriented NSOEs
NSOEs are encouraged to establish Sino-foreign joint ventures or cooperation businesses, and to set up processing businesses' sales networks in other countries through technology transfer and direct investment or export of commodities so as to promote the province's export of products and labor.

7. Legitimate rights and interests of NSOEs should be well protected.

(21) Regulating business operation
NSOEs shall improve management, enhance performance, strictly abide by relevant laws, regulations and policies and observe market rules, ensure safety in production and honesty in operation and tax payment. To protect legal business operation and fair competition, relevant authorities shall cooperate with each other to keep good market order, ban all unlicensed businesses, punish illegal practices and doings that are harmful to consumers, such as production and sale of fake goods, cheating, tax evasion and tax fraud.

(22) Improving legal environment
Based on the principle of fairness and justice local laws and decrees and government regulations shall be made and perfected to protect the legitimate rights and interests of the NSOEs. Problems that occur in the development of NSOEs should be dealt with mainly through education, and resolved by economic or administrative means to the greatest extent. Public security authorities shall enhance security control in the production and operation venues of NSOEs. Judicial authorities shall severely punish illegal behaviors and crimes jeopardizing the normal operation order of NSOEs and violating private properties or personal safety of the owners of NSOEs. Particular personnel shall be assigned to handle under supervision cases involving large sums of money with grave consequences. The construction of the law-enforcement team shall be enhanced and cases involving NSOEs shall be vigorously and fairly processed to maintain the justice of law.

(23) Introducing special protection over particular enterprises
Efforts should be made to create an excellent environment for the development of NSOEs. For those from other provinces that have invested 10 million Yuan and above or that generate one million or more in tax annually and those listed as key NSOEs of the province, prefecture and county level, the local supervision authorities shall give them special protection. Inspections of such enterprises by administrative and legal authorities or law enforcement agencies cannot be conducted without the prior approval of the supervision authorities at the same level.

(24) Strengthening supervision over law-enforcement
Taking the serving of reform, development and stability as the point of departure in the work of political-legal organs, legal support should be provided to NSOEs. In the event that the legal authority deems necessary to apply restrictive measures to the legal representatives of a NSOE or to detain or close down properties of a NSOE or its legal representatives, the enforcement shall only become effective after the coordination with the CPC's political-legal work committee respectively at the province, prefecture and county level is sought and approval is granted if the annual tax paid by the concerned enterprise is respectively above 5 million Yuan, between 2 million Yuan and 5 million Yuan and between half a million Yuan and 2 million Yuan, or if it is a key NSOE certified by the competent authorities respectively at the province, prefecture and county level. When other administrative and law enforcement authorities need to detain or close down a NSOE or its legal representative's operation rights or title to property, prior approval must be obtained from respective supervision departments as well.

8. The "four misconducts" should be strictly forbidden.

(25) Enhancing supervision
Relevant departments for addressing to the "four misconducts" shall be re-adjusted and strengthened to be able to well direct, supervise and coordinate the work on harnessing the "four misconducts", namely, arbitrary charges, indiscriminate penalties, coerced donations and excessive inspections. All relevant departments at all levels shall conduct the self-examination per six months, and report in written form to the Party Committee and the government of the same level.

(26) Regulating charges

Based on the principle of "whoever calls the shots takes the responsibility", a province-wide screening of all items of charges involving NSOEs shall be conducted. All chargeable items stipulated by local authorities below the provincial level shall be abolished. All items and rates shall be unified and made public. No authority is allowed to charge any extra item not known to the public. All approved items shall be charged according to the lowest rate. Records must be kept of all charges made.

(27) Reducing inspections
Repeated inspections over NSOEs are strictly forbidden. In principle, only one routine inspection of the same project of the same enterprise by the same department can be made within a year. Inspections cannot be carried out without documents or warrants issued by an authority of the county level or above.

(28) Strictly controlling penalties
No governments or government institutions shall set penalties target to their subordinate units. To impose any penalties on self-employed businesses and NSOEs, the law-enforcement department shall produce vouchers printed by the state or the provincial finance department. All penalties shall be made payable to banks and finally turned into the treasury. No penalties can be retained or shared by, or transferred or rewarded to administrative or law-enforcement agencies.

(29) Forbidding coerced donations
It is forbidden for any competent department or any of its functionaries to require NSOEs to hold receptions on or in their behalf or reimburse the departments' or individual's own expenses. It is forbidden to either forcefully sell any goods to NSOEs or force NSOEs to purchase goods or publications from designated sources; it is forbidden to force NSOEs to participate in activities such as standard attainment and competitions, or any academic seminars and profit-oriented business trainings; it is also forbidden to either force NSOEs to make donations or buy advertisements or collect any tie-in charges from NSOEs.

(30) Accounting for faults and mistakes
The system of leaders' accountabilities shall be introduced to relevant departments for addressing to the "four misconducts", chief leaders of all departments shall be held accountable for the occurrence of any of the "four misconducts" in their organizations. Staff of law enforcement organs who do not obey relevant regulations and breach this "Notions" shall be transferred away from their current positions upon proof of their violation or even discharged if their violation is serious. If violation of the rules has occurred for more than three times in the same department, its chief leader(s) shall have to make self-criticism and report to the Party Committee and the government and to be punished according to the Party's disciplines and administrative rules. For severe cases, the chief leader(s) shall be demoted or dismissed.

(31) Enhancing supervision from the public
Local People's Congresses and committees of the Chinese People's Political Consultative Conference shall include the evaluation of services and behaviors of administrative authorities and law-enforcement departments in the overall assessment of the work of such organizations and their leaders. The office for redressing the "four misconducts" shall organize annual evaluation participated by NSOEs over the performance of the relevant government agencies and publicizes the results. Chief leaders of departments, which show low public satisfaction, shall be replaced.

9. The service functions of government should be strengthened and efficiency and service standard be raised.
(32) Improving the government's service models
Administrative examination and approval procedures, administrative mandatory provisions and charges should all be incorporated into the legal framework. Matters pertaining to the administrative procedures of examination and approval shall be reviewed in real earnest, procedures simplified and authority to grant approvals transferred to lower level administrations, and the number of items which need approvals should be reduced, while the process regulated. Integrated law-enforcement and management shall be tried out in cities. Policies shall be made public, i.e. all new policies or measures formulated by the competent authorities shall be effectively notified to business operators. Mandatory policies and measures shall not come into force unless they have been made public. Community service centers shall be further perfected and efficiency and quality of service improved.

(33) Cultivating intermediary agencies
Various business intermediary agencies should be cultivated and supervision upon them strengthened so as to ensure their strict abidance by laws and regulations and observation of market rules. Government departments must not transfer their own responsibilities to business intermediary agencies or secondary level organizations and charge NSOEs through these agencies for services that should originally be provided for free. Government authorities should not appoint any particular intermediary agency as the designated service provider for business operators and should not require NSOEs to conduct repeated appraisals on a single item.

(34) Ensuring human resource development
The existing higher education institutions and intermediary organizations should be made use of to carry out trainings to managerial staff for NSOEs. Various types of talented personnel should be encouraged to work for NSOEs. Professionals recruited from other provinces or localities may enjoy exactly the same preferential treatment as those recruited by state-owned or collective enterprises. Managerial staff and technical workers in NSOEs may participate in relevant examinations to obtain professional qualifications or certificates for specialized professions. Returned overseas students who establish or work for NSOEs may enjoy all preferential treatment as found in relevant state regulations and policies.

(35) Improving the social security system
Social insurance system including endowment insurance, medical care, industrial injury and procreation insurance shall be applied to NSOEs as soon as possible so as to cover their employees and ensure their legitimate rights and interests. Those who have left state-owned or collective enterprises to become self-employed or to set up their own business or to work for NSOEs may have their insurance continued on the original basis provided they turn in the required social insurance fees. Their dossiers may be kept in the labor departments, personnel departments or intermediary institutions.

(36) Providing comprehensive services
Efforts shall be made to alleviate outside investors of their day-to-day cares. Non-state-owned entrepreneurs may enjoy the same treatment as local residents regarding their children's entry into kindergartens or schools when they produce their business license upon registry. Governments and education departments at various levels shall take effective measures to help the children of those who come from other regions to work for local NSOEs to receive the compulsory education.

Public security departments should process urban residency registrations and vehicle registrations in time for business operators and their families from other jurisdictions. Local governments may decide on their own what measures to take regarding the education of the children and abode management of those self-employed operators from other jurisdictions.

10. Leadership should be enhanced and implementation carried out to the full.

(37) Introducing the system of responsibility
Party committees and governments at various levels should put the development of the non-state-owned economy in their agendas as a key strategic undertaking for economic development and include it in the overall program for the national economic and social development. The growth rate and quality of the non-state-owned economy should be regarded as a major index for the evaluation of government's macro-economic regulation and achievements of governance. The responsibility system and target accomplishment system for developing non-state-owned economy shall be introduced at all levels. Outstanding units and individuals shall be awarded and commended. Leaders of units that fail to reach the target shall be held accountable. A liaison system between the government and the non- state-owned economy shall be established, whereas ranking provincial party and government leaders and heads of departments of the provincial level are able to keep in touch with and provide assistance to all key NSOEs from the provincial down to the county level; that of the prefecture and county level should be twinned with key NSOEs of the township level.

(38) Placing emphasis on implementation
Based on the guidelines in this "Notions" and local conditions, local government and relevant departments at different levels shall make specific corresponding policies and rules for the implementation and enforcement of this "Notions". The provincial government shall conduct an overall annual inspection in order to push for the full implementation of this "Notions". For those who perform poorly in the implementation, the government shall order them to catch up; for those who perform their duties in a perfunctory manner, the government shall order them to rectify within limited time periods; for those who disobey orders and fail to implement this "Notions", the government shall render them with severe punishment. The press and media should further promote non- state-owned economy and play a guiding role in orientating public opinions in favor of the non-state-owned economy. Typical cases in violation of laws and disciplines shall be timely exposed and a good public environment for the development of non-state-owned economy cultivated.

(39) The "Notions" shall come into force on the date of publication. It is applicable to self-employed businesses, individual-owned businesses, township enterprises, solely-foreign-funded, Sino-foreign joint venture and cooperation businesses and all corporations whose main stockholders are neither the state nor the public. Other types of enterprises may take the "Notions" as reference in practice. In case that any existing provincial policies are in conflict with the "Notions", the "Notions" shall prevail.

(40) The provincial Economic and Trade commission is responsible for explaining details regarding questions arising from the implementation of this "Notions".