Decentralizing the Economy

On May 15, China's State Council issued a document saying that 133 items in terms of economy will no longer require the Central Government's administrative approval. This move is expected to stabilize the country's economic growth. It will help the local economy take a more free way in development.

China's economy has withstood the blows of the global financial crisis and realized an early recovery, but its recent sluggish performance has presented a worrying prospect. Evidence shows that a new round of reform is needed to relieve pressure from muted economic recovery.

The new round of reform should deepen the "market-oriented" system. The priority facing the government lies in dealing with both the market and society. The state is supposed to give up power in some areas while focusing on other affairs, so as to stimulate the innovation of major market participants and increase the internal driving force for economic growth.

China's market economic mechanism has only just taken shape, and is still quite immature. Moreover, the government sometimes tends to intervene in issues it should not get involved in. The result has been poor administrative efficiency, an unbalanced economic structure, environmental pollution and corruption.

Areas that no longer need Central Government administrative approval include production and business operations, as well as investment in key areas and monopoly industries. This will greatly help strengthen market competitiveness and encourage enterprises to enhance innovation and the capability to explore the market. The move to lower the threshold for investment and operation alone will greatly stimulate private investment.

Of the areas exempted from administrative approval, some include foreign investment in China and its own investments abroad. This will provide foreign investors more convenience in the local market and create a fairer environment for competition.