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China to make investment easier

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Staff writer ▼ | June 4, 2013
China businessChina's State Council announced reforms of 133 items that require top-level approval, including rights on investment, which will be delegated to lower-level governments.

The new cabinet has heavily streamlined the central authority and delegated more powers to lower-level governments.

Two days before the cabinet announced its decision, Premier Li Keqiang said the government had three goals in mind for its streamlining reforms: to ensure economic growth, to facilitate changes in the country's growth model and to increase employment. He stressed that transforming the government at the very top is urgently needed for maintaining the healthy development of the economy, writes China Daily.

Song Xiaowu, Vice President of the China Society of Economic Reform, says China is in a crucial period of economic development, whereby the economy is shifting from an export-oriented one to a consumption-driven one. Therefore, cutting back on Central Government red tape is quintessential during this time of economic transition.

Gao Xiaoping, Executive Vice President of the Chinese Public Administration Society, says the changes will help break up monopolies and put more power in the hands of the market.

After the 2008 global financial crisis, the Chinese economy became the first to bottom out, attracting global attention. However, its economic growth is beginning to be stagnant this year, and the recovery of the real economy is weak. It would be difficult for the Chinese economy to return to the days of 10-percent or even higher growth merely driven by investment, says Song. A high growth rate is no longer a priority, as increasing employment and maintaining social stability have become top concerns.

"China must both ensure stable growth and improve the quality of growth. Hence it is particularly significant for the government to cut and ease administrative powers, which will encourage society and enterprises to be more creative in solving problems," said Song.

"Market access requires approval from the government. Without a government permit, no company can enter a sector even if it has capital. This restrains the vitality of economic growth," Song said.

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