State Council expands "permit-licence separation" pilot reform programme to all pilot FTZs
On 22 September 2017, the State Council issued the Opinions on Promoting the "Permit–Licence Separation" Pilot Reform Programme on a More Extensive Scale (国务院关于在更大范围推进〝证照分离〞改革试点工作的意见), effective immediately through 21 December 2018.
The opinions aim to replicate a pilot reform programme, which simplifies administrative licensing procedures by separating the administration of operating permits and business licences, into the pilot free trade zones (FTZs) in Tianjin, Liaoning, Zhejiang, Fujian, Henan, Hubei, Guangdong, Chongqing, Sichuan and Shaanxi. The programme was initially conducted in the Shanghai Pudong New District, and was based on reforms approved by the State Council in relation to 116 administrative licensing items. For more information, see Legal update, State Council approves pilot reform in Shanghai to simplify administrative licensing procedures.
The opinions permit each FTZ to adopt any of these reforms without seeking further State Council approval, though State Council approval is required to implement additional reforms involving laws, administrative regulations and State Council documents.
The opinions require the FTZs to implement the reforms by:
  • Standardising administrative licensing standards and procedures by replacing traditional examination and approval procedures with record-filing procedures, implementing a self-policing mechanism through industry associations and enterprise reporting obligations, and enhancing administrative transparency and predictability for businesses.
  • Strengthening post-establishment enterprise supervision by requiring regulators in the FTZs to carry out random inspections, provide guidance to industry associations, and implement publicly available credit ratings, information disclosure and blacklisting systems.
  • Promoting information sharing through the verification and disclosure of basic enterprise information and by further developing the national enterprise credit information platform and inter-departmental data exchange system.
  • Under the leadership of each FTZ's provincial people's government, determining which reforms to adopt, identifying the bases, materials, procedures and time limits for matters still subject to examination and approval, and summarising and assessing the experiences and methods for implementing and supervising the administrative licensing reforms.

Market reaction

Zhang Wei, Associate, Morrison & Foerster, Beijing

"Expanding the pilot programme to scale back the range of industry permits is a positive development. It is important to note, however, that this reform only applies in China's designated pilot FTZs and that implementation will vary by region. There is still a long way to go before this measure and other related reforms have a concrete positive effect on businesses outside the FTZs."