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Advancing supply-side structural reform demands removing barriers to market based allocation of the factors of production and reducing government-imposed transaction costs. To address the longstanding issues of excessive emphasis on approval procedures, insufficient attention to regulatory processes, and a failure to provide strong services, we have been consistently deepening reforms to streamline administration, delegate powers, improve regulation, and strengthen services. We have sped up efforts to transform government functions, reduced micromanagement and direct intervention, and done more to improve macro regulation, market regulation, and public services. Over the past five years, the number of items subject to approval by State Council offices and departments has been slashed by 44 percent, the practice of non-administrative approval has been completely put to a stop, the number of business investment items subject to central government approval has been cut by 90 percent, intermediary services needed for obtaining government approval have been cut by 74 percent, and the requirements for professional qualification approval and accreditation have been significantly reduced. The number of items for which central government sets the prices has been cut back by 80 percent, and local government-priced items have been cut down by over 50 percent. Comprehensive reforms have swept the business system, including business and capital registration, reducing the time it takes to start a business by over a third. We have developed new and better ways of conducting compliance oversight, and introduced a new model of oversight combining randomly selected inspectors who inspect randomly selected entities and the prompt release of results. These efforts have made regulation more effective and impartial. We have rolled out the Internet Plus Government Services model and adopted measures such as the one-stop service model. Thanks to the above reforms, the business environment has consistently improved, the market is more energized, and people can access government services more easily.
Third, with a commitment to innovation-driven development, and a focus on unlocking public creativity, we have achieved a remarkable improvement in our general capacity for making innovations and for seeing that innovation delivers. We have put into action the innovation-driven development strategy and worked to build a better ecosystem for innovation, giving shape to innovation involving multiple actors making across-the-board advances. Research institutes and universities now have greater say over their research; research projects and funding are better managed, and the way of managing rights and interests relating to scientific and technological advances has undergone reform. We have supported Beijing and Shanghai in building themselves into centers for scientific and technological innovation, and set up 14 new national innovation demonstration zones, thus creating a number of regional innovation hubs. With enterprises as the main actors, we have boosted the development of a system for technological innovation. China has seen the emergence of a number of world-class innovative enterprises and new-type R&D institutions. We have launched and taken bold moves in the nationwide business startup and innovation initiative, adopted support policies designed to benefit all entrepreneurs and innovators, and improved the incubation system. China’s market entities, all types included, now total over 98 million, an increase of more than 70 percent over the past five years. The number of in-force Chinese invention patents issued in China has tripled, and the volume of technology transactions has doubled. In the global race of scientific and technological innovation, China has shifted place, from following others to keeping pace and even leading the pack in more and more areas. Our country has become a globally recognized fertile ground for innovation and business ventures.
Fourth, with a commitment to deepening reform across the board, we have taken major steps to remove institutional barriers, thus steadily boosting the driving forces powering development. Solid progress has been made in the reform of state-owned enterprises (SOEs) and state assets; the reform to convert SOEs into standard companies has now basically been completed; and efforts to merge and restructure, reduce the organizational levels in, and improve the quality and efficiency of SOEs have made good progress. The performance of SOEs has been much improved, with profits last year growing by 23.5 percent. We have deepened reform in sectors like energy, rail, and the salt industry. Market access to the non-public sector has been expanded. An integrated registration system for immovable property has been put in place, and the property rights protection system has been improved. Fiscal and tax reforms have made major progress. We have introduced the requirement nationwide for government budgets and final accounts to be released to the public, developed a system based mainly on tax sharing for dividing revenue between central and local government, launched the reform to define the respective financial powers and expenditure responsibilities of central and local government, and significantly scaled up general transfer payments from central to local government, while also cutting by two thirds the number of items for which special purpose transfer payments are made. We have largely lifted controls on interest rates, established a deposit insurance system, encouraged large and medium commercial banks to set up inclusive finance divisions, deepened the reform of policy-backed and development financial institutions, and strengthened the mechanisms for coordinating financial regulation. We have improved the mechanisms for promoting more balanced development of urban and rural compulsory education, and reformed the examination and enrollment systems. We have established unified basic pension and health insurance schemes for rural and non-working urban residents, and brought government office and public institution pension schemes into line with enterprise schemes. We have unveiled a plan for appropriating a share of state capital to replenish social security funds. We have carried out coordinated medical service, medical insurance, and pharmaceutical reforms. We have introduced a comprehensive reform in all public hospitals, rescinded the policy, long in effect, of allowing hospitals to profit from higher priced medicine, and made breakthroughs in the reform of approval systems for medicine and medical devices. We have pursued reform to separate rural land ownership rights, contract rights, and use rights, and already seen that over 80 percent of contracted rural land covered by this reform. We have reformed the system for purchasing and stockpiling important agricultural products. We have improved the functional zoning system, established performance evaluation and accountability systems for ecological conservation, and instituted the river chief and lake chief systems. We have piloted a system placing government environmental offices below the provincial level directly under the supervision of provincial-level environmental offices. The deepening of reform in each and every field has given a boost to sustained, healthy economic and social development.
Fifth, with a commitment to China’s fundamental policy of opening-up, we have focused on promoting win-win cooperation, and significantly improved the performance of our country’s open economy. We have launched and worked with other countries in the Belt and Road Initiative. We initiated the Asian Infrastructure Investment Bank, set up the Silk Road Fund, and launched a number of major connectivity and economic and trade cooperation initiatives. Beginning with the China (Shanghai) Pilot Free Trade Zone, we have established 11 pilot free trade zones. A number of successful outcomes from pilot reforms are now being applied nationwide. We have reformed the cost-sharing mechanism for export tax rebates, and the central government now pays the full sum of increases in export tax rebates. We have set up 13 comprehensive experimental zones for cross-border e-commerce. Single-window document processing for international trade has been applied nationwide, cutting the average time for customs clearance by over half. Imports and exports have rebounded and steadily grown. For foreign investment, we have replaced the approval system with a negative list model, and have cut restrictions by two thirds. The composition of foreign investment has improved, with investment in high-tech industries doubling. We have intensified efforts to attract talent, and the number of foreign experts working in China has grown by 40 percent. We have guided the healthy development of outbound investment. We have moved forward with international cooperation on production capacity; high-speed rail, nuclear power, and other types of Chinese equipment have entered international markets. We have signed or upgraded eight free trade agreements. We have launched the Shanghai-Hong Kong Stock Connect, the Shenzhen-Hong Kong Stock Connect, and the Bond Connect. The RMB was included in the IMF’s Special Drawing Rights basket, representing a major step forward in its internationalization. China has opened its doors wider to the world. This opening has played a powerful role in our own development, and it presents important opportunities for the rest of the world.