Market to play bigger role, says Li

Premier outlines next steps on road to reform of government

China will allow the market to play a bigger role in economic innovation, Premier Li Keqiang said on Monday at a State Council meeting on the reform of government.

As more power is delegated to lower levels, the government should shift its focus to three areas — improving the policy environment for development, providing high-quality public service, and upholding social fairness and justice, he said.

There should be a better balance between the government and the market, and between the government and society, the premier said during a videophone conference to launch a new round in transforming the functions of the cabinet and its branch agencies.

The reform of government functions is a major effort to help the nation maintain growth, control inflation, reduce risks, and enjoy healthy and sustainable economic development.

According to the premier, the reform will minimize government approval needed to authorize general investment projects and general qualification certificates.

It will contribute to fair competition in the market, and to corporate-level efforts to upgrade management and technology.

It will ultimately expand employment opportunities, through speeding up the registration of industrial and commercial enterprises, and give more latitude to small and medium-sized enterprises and to service industries. It will also inject greater vitality to development initiatives at local level.

Li stressed that more effective administration should be in place on matters of deep public concern, including food safety alarms, the environment and work safety. Justice should be meted out in a timely manner when the law has been broken in such cases.

More should be done to cut redundant capacity in industries that suffer such problems, he said.

Li's remarks come after the State Council, China's cabinet, launched two rounds of measures in the past two months, canceling and delegating 133 items concerning administrative examination and approval.

"China, in the next step, will continue to push forward the initiative (on transforming government functions), with greater courage and wisdom," Li said. "We will fight to the end of the uphill battle."

Wei Jianguo, vice-chairman and secretary-general of the China Center for International Economic Exchanges, said: "It is crucial for China to transform the government's functions, as government intervention and complicated administrative procedures in examination and approval during recent years have dampened the confidence of the market and enterprises nationwide.

"The key is to let the government, market and enterprises do their own job. What the government needs to do is to enhance supervision and management and to create a business-friendly environment."

Wei said the new generation of leadership is on the right track in balancing the relationship with the market and society.

The new government's priority is to curb red tape and reduce administrative intervention in the market and on social issues.

In early March, legislators endorsed a government restructuring plan, ushering in an era of intensified reform toward less bureaucracy, more efficiency and enhanced management.

The reform package cuts the number of ministries under the State Council from 27 to 25, dismantling the ministry of railways and merging several other government agencies concerning food and drugs, energy, maritime affairs, population and family planning, health and entertainment.

Li said, "China should cope with relations between the government and market and between government and society, delegating powers and managing the key issues."

Li said the transformation efforts will help China sustain healthy and smooth economic growth.

In 2012, the economy saw its slowest growth for 13 years, expanding by 7.8 percent, despite a fourth-quarter bounce to 7.9 percent year-on-year, considered to be the starting point of what is widely seen as a modest recovery.

The government has set a 2013 growth target of 7.5 percent, a level that is still not an easy task, with sluggish US economic demand and recession in the eurozone hurting Chinese exports, economists said.

The country's economic growth unexpectedly stumbled in the first quarter, slowing to 7.7 percent.

During his news conference at the two legislative sessions in March, Li said transforming government functions is a key task, vowing to cut more than a third of some 1,700 items on issues relating to the State Council's administrative examination and approval.

"Reforms related to administrative examination and approval are a breakthrough to the transformation of the government's functions, and also provide solutions to help China launch an updated version of its economy," he said.

Lu Mai, secretary-general of the China Development Research Foundation, said, "Delegating power is a smart choice, as this can improve the efficiency of the market and corporations and let the market decide what to do and where to go. But what is also important is enhanced management and supervision on some key hot issues, such as food safety and environmental pollution."