Decision of the State Council on Investment Reform

Author: Compiled by the Press
Publisher:
Publish Date: 2005-04-01
Features: Since the reform and opening-up, the state has carried out a series of reforms on the original investment system, breaking the highly centralized investment management model under the traditional planned economy system and initially forming a new pattern with diversified investment entities, multiple sources of funding, diversified investment methods, and market-oriented project construction. However, the current investment system still has many issues, especially the lack of full implementation of enterprises' investment decision-making power, the insufficient of the market's fundamental role in resource allocation, and the need for further improvement in the scientific and democratic level of government investment decision-making, as well as the effectiveness of investment macro-control and supervision. Therefore, the State Council has decided to further deepen the investment system reform.
I. Guiding Ideology and Goals of Deepening Investment System Reform
(1) The guiding ideology of deepening investment system reform is: in line with the requirements of improving the socialist market economy system, fully play the fundamental role of the market in allocating resources under national macro-control, establish the principal position of enterprises in investment activities, regulate government investment behavior, protect the legitimate rights and interests of investors, create a market environment conducive to fair and orderly competition among various investment entities, promote the rational flow and effective allocation of production factors, optimize the investment structure, improve investment efficiency, and promote coordinated economic development and comprehensive social progress.
(2) The goal of deepening investment system reform is: reform the government's management system for enterprise investment, implement the principle of "who invests, who decides, who benefits, who bears the risk," and grant enterprises full investment autonomy; reasonably define the government's investment functions, improve the scientific and democratic level of investment decision-making, and establish a system of accountability for investment decision-making; further expand project financing channels, develop various financing methods; cultivate standardized investment intermediary service organizations, strengthen industry self-regulation, and promote fair competition; improve the investment macro-control system, refine control methods, and enhance control measures; accelerate the legislative process in the investment field; strengthen investment supervision, and maintain a standardized investment and construction market order. Through deepening reform and expanding opening-up, a new investment system guided by the market, with enterprises making autonomous decisions, independent bank lending, diversified financing methods, standardized intermediary services, and effective macro-control will ultimately be established.
II. Transforming Government Management Functions and Establishing Enterprises' Investment Principal Status
(1) Reform the project approval system to implement enterprises' investment autonomy. Comprehensively reform the current practice of approving enterprise investments without discrimination between investment entities, funding sources, or project types, based on the size of investment. For projects not funded by the government, the approval system will be abolished, and instead, a verification system and a filing system will be implemented based on different circumstances. The government will only verify major projects and restricted projects from the perspective of safeguarding public interests. All other projects, regardless of size, will be subject to the filing system. Enterprises will independently decide on market prospects, economic benefits, funding sources, and product technical plans, bear risks, and legally handle environmental protection, land use, resource utilization, safety production, urban planning, and tax reduction and exemption confirmation procedures. For projects funded by government subsidies, loans, or interest subsidies, the government will only approve funding application reports. Local governments and departments must correspondingly improve management methods and standardize management behavior, and may not under any name intercept or withhold investment decision-making power delegated to enterprises.
(2) Standardize the verification system. Strictly limit the scope of projects subject to government verification and adjust it in a timely manner based on changing circumstances. The "Catalog of Investment Projects Subject to Government Verification" (hereinafter referred to as the "Catalog") will be formulated by the State Council's investment management department in conjunction with relevant departments, submitted to the State Council for approval, and implemented. Without the approval of the State Council, local governments and departments may not arbitrarily increase or decrease the scope specified in the "Catalog." Enterprises investing in projects subject to the verification system will only need to submit a project application report to the government and will no longer go through the procedures of approving project proposals, feasibility studies, and construction reports. The government will verify the project application reports submitted by enterprises primarily from the aspects of maintaining economic security, rational resource development, protecting the ecological environment, optimizing major layouts, safeguarding public interests, and preventing monopolies. For foreign-invested projects, the government will also verify market access and capital management. Government departments must formulate strict and standardized verification systems, clearly define the scope, content, reporting procedures, and processing deadlines for verification, and publish them to the public to improve efficiency and transparency.
(3) Improve the filing system. For enterprise investment projects outside the "Catalog," the filing system will be implemented. Except as otherwise provided by the state, enterprises will file with local government investment management departments according to the principle of territoriality. The specific implementation measures of the filing system will be formulated by provincial people's governments. The State Council's investment management department will strengthen guidance and supervision of filing work to prevent the use of filing as a pretext for disguised approval.
(4) Expand the investment decision-making power of large enterprise groups. Large enterprise groups with basically established modern enterprise systems can invest in projects within the "Catalog" either by submitting separate verification for each project or by formulating medium- and long-term development and construction plans. Once approved by the State Council or the State Council's investment management department, projects within the "Catalog" in the plan will no longer require separate verification but only filing. Enterprise groups must promptly report to relevant departments of the State Council on the implementation of the plan and the construction of projects.
(5) Encourage social investment. Broaden the investment fields for social capital, allowing it to enter infrastructure, public utilities, and other industries and fields not prohibited by laws and regulations. Gradually rationalize the prices of public products, and through measures such as injecting capital, loan subsidies, and tax incentives, encourage and guide social capital to participate in the operation of profitable public welfare and infrastructure projects through sole proprietorship, joint ventures, cooperation, joint operations, project financing, and other methods. For projects involving the development and utilization of nationally monopolized resources and requiring unified planning and layout, the government may, after determining the construction plan, publicly bid to select project owners. Encourage and support enterprises with conditions of various ownerships to invest overseas.
(6) Further expand financing channels for enterprise investment projects. Allow various enterprises to raise investment funds through equity financing, gradually establishing a multi-tiered capital market with complementary multiple financing methods. With the approval of the State Council's investment management department and the securities regulatory authority, pilot some infrastructure projects with stable returns for public offering of shares, convertible bonds, and other methods to raise construction funds. Under strict risk prevention, reform the management system for enterprise bond issuance, expand the scale of enterprise bond issuance, and increase the variety of enterprise bonds. Improve and perfect the approval and corresponding risk management systems for banks' fixed asset loans based on market-oriented principles, supporting project construction through syndicated loans, financing leases, project financing, financial advisory, and other business methods. Allow various-owned enterprises to apply for the use of foreign loans according to relevant regulations. Formulate relevant laws and regulations, organize the establishment of a financing and credit guarantee system for small and medium-sized enterprises, encourage banks and qualified guarantee institutions to research and innovate in guarantee methods for project financing, adopt various forms to enhance the capital strength of guarantee institutions, promote the establishment of small and medium-sized enterprise investment companies, and establish and improve venture investment mechanisms. Standardize the development of various types of investment funds. Encourage and promote the indirect investment of insurance funds in infrastructure and key construction projects.
(7) Standardize enterprise investment behavior. All enterprises must strictly comply with laws and regulations on land resources, environmental protection, safety production, and urban planning, strictly implement industrial policies and industry access standards, and may not invest in projects prohibited by the state. They should act with integrity and in compliance with the law, safeguard public interests, ensure project quality, and improve investment efficiency. State-owned and state-controlled enterprises should, in accordance with the requirements of the reform of state-owned asset management systems and the modern enterprise system, establish and improve the system of state-owned asset investors, investment risk constraint mechanisms, scientific and democratic investment decision-making systems, and accountability systems for major investments. Strictly implement the legal person responsibility system, capital contribution system, bidding system, engineering supervision system, and contract management system for investment projects.
III. Improving the Government Investment System and Standardizing Government Investment Behavior
(1) Reasonably define the scope of government investment. Government investment should mainly be used in economic and social fields related to national security and where the market cannot effectively allocate resources, including strengthening public and infrastructure construction, protecting and improving the ecological environment, promoting the economic and social development of underdeveloped regions, and advancing scientific and technological progress and the industrialization of high and new technologies. Projects that can be constructed by social investment should, as far as possible, utilize social funds. Reasonably divide the investment responsibilities between the central and local governments. Central government investment, in addition to the construction of its own government organs, will mainly be allocated to projects crossing regions, basins, and having a major impact on the overall development of the economy and society.
(2) Improve the decision-making mechanism for government investment projects. Further improve and adhere to scientific decision-making rules and procedures to enhance the scientific and democratic level of government investment project decision-making. Government investment projects generally require evaluation and argumentation by qualified consulting intermediaries, and competition mechanisms should be introduced in consultation and evaluation, with reasonable competition rules formulated. For particularly major projects, expert review systems should be implemented. Gradually implement a publicity system for government investment projects to widely solicit opinions and suggestions from all parties.
(3) Standardize the management of government investment funds. Formulate medium- and long-term plans and annual plans for government investment,、, including budgetary investment, various special construction funds, and loans from foreign sources. Government investment funds will be allocated to projects, and based on funding sources, project nature, and control needs, can be adopted in the form of direct investment, capital injection, investment subsidies, loan transfers, and loan interest subsidies. For capital injection, an investor representative must be determined. Corresponding management methods should be established for different types of funds and their uses, gradually achieving the scientific, institutionalized, and standardized decision-making procedures and fund management of government investment.
(4) Simplify and standardize the approval procedures for government investment projects, and reasonably divide approval powers. Based on project nature, funding sources, and division of responsibilities, reasonably determine the project approval powers between the central and local governments, as well as between the State Council's investment management department and other relevant departments. For government investment projects using direct investment and capital injection, only project proposals and feasibility studies will be approved from the perspective of investment decision-making, and construction reports will no longer be approved except in special cases. At the same time, strict approval work for preliminary design and budget approval of government investment projects should be implemented. For projects using investment subsidies, loan transfers, and loan interest subsidies, only funding application reports will be approved. The specific division of powers and approval procedures will be formulated by the State Council's investment management department in conjunction with relevant parties, submitted to the State Council for approval, and then promulgated and implemented.
(5) Strengthen the management of government investment projects and improve construction implementation methods. Standardize the construction standards for government investment projects and revise and improve them in a timely manner based on changing circumstances. Investment funds for project construction will be allocated according to the progress of project construction. Strengthen the management of intermediaries in government investment projects, implement qualification management for consulting intermediaries, bidding agents, and other intermediaries to improve the quality of intermediary services. Accelerate the implementation of the "agent construction" system for non-commercial government investment projects, that is, through bidding, select specialized project management units to be responsible for construction implementation, strictly control project investment, quality, and schedule, and transfer the project to the user after completion and acceptance. Enhance investment risk awareness and establish and improve risk management mechanisms for government investment projects.
(6) Introduce market mechanisms to fully leverage the benefits of government investment. Governments at all levels must create conditions to attract social capital to participate in the construction of profitable public welfare and infrastructure projects with reasonable returns and certain investment recovery capabilities through means such as、investment subsidies, etc. For monopolistic projects, trial will be implemented, and fair competition will be carried out through owner bidding systems to protect public interests. Government investment projects already completed and meeting conditions may, after approval, legally transfer their property rights or operational rights to recover funds for rolling investment in various types of public welfare and infrastructure construction.
IV. Strengthening and Improving Macro-Control of Investment
(1) Improve the investment macro-control system. Under the leadership of the State Council, the National Development and Reform Commission, in coordination with relevant departments, will, according to their division of responsibilities, closely cooperate, effectively operate, and legally supervise the investment activities of the entire society, maintain a reasonable investment scale, optimize the investment structure, improve investment efficiency, and promote the sustainable, rapid, and coordinated development of the national economy and comprehensive social progress.
(2) Improve the macro-control methods for investment. Use a combination of economic, legal, and necessary administrative measures to effectively control the investment of the entire society, primarily through indirect control methods. Relevant departments of the State Council will formulate development and construction plans for important fields such as education, science and technology, health, transportation, energy, agriculture, forestry, water conservancy, ecological construction, environmental protection, and strategic resource development, including necessary special development and construction plans, to clarify the guiding ideology, strategic goals, overall layout, and main construction projects. Development and construction plans approved according to prescribed procedures will serve as an important basis for investment decision-making. Governments at all levels and their relevant departments must strive to improve the efficiency of government investment and guide social investment. Formulate and adjust the National Fixed Asset Investment Guidance Catalog and the Catalog for Industrial Guidance of Foreign Investment in a timely manner to clarify projects encouraged, restricted, and prohibited by the state. Establish an investment information release system to promptly release information on the government's investment control objectives, main control policies, investment status and development trends in key industries, and guide the investment activities of the entire society. Establish a scientific industry access system, standardize environmental protection standards, safety standards, energy and water consumption standards, and product technology and quality standards for key industries to prevent low-level repetitive construction.
(3) Coordinate macro-control measures for investment. According to the requirements of national economic and social development and macro-control needs, reasonably determine the scale of government investment to maintain the active guidance and effective control of the state over the investment of the entire society. Use flexible measures such as investment subsidies, interest subsidies, prices, interest rates, and taxes to guide social investment and optimize the industrial and regional structure of investment. Formulate and adjust credit policies in a timely manner to guide the total volume and investment of medium- and long-term loans.