Speech at the Press Release of the

Information Office of the State Council of the

People’s Republic of China

(7 November 2013)

H. E. Mr. ZHANG MAO, Commissioner,

State Administration of Industry and Commerce (SAIC)

Ladies and Gentlemen,

Good morning! It is a great pleasure for me to inform you of the reform of the registered capital system.

As we all know, on 25 October 2013, Premier LI Keqiang presided over the executive meeting of the State Council to arrange promotion of the registered capital system. It is another important measure in the new government’s overall layout to transform government functions and deepen reform. It purports at further streamlining administration and delegating power, constructing a market environment of fair competition, mobilizing non-government capital, promoting growth of small and micro enterprises, especially innovative businesses, creating jobs and pushing forward development of emerging production forces.

1. Basic principles and major contents regarding reform of the registered capital system

Reform of the registered capital system will be promoted on the principles of convenience, efficiency, standard and uniform practice, and easy access but stringent regulation, for the purpose of innovating the business registration system, reducing access criteria, reinforcing responsibility and accountability of market players, and facilitating the formation of an honest, fair and orderly market.

The reform will cover five aspects: (1) Relax thresholds of registered capital; (2) Change the system of annual business inspection to the system of annual reporting; (3) Simplify registration of domicile (business premise) of market players, with specific regulations to be determined by local governments; (4) Vigorously promote the construction of a business integrity system; and (5) Reduce the cost of start-ups by changing actual paid-in of registered capital to commitment to payment of registered capital.

2. Reform of the registered capital system helps stimulate market vitality

The registered capital system is an important component of the industry and commerce registration system. Continuous reform and improvement of the industry and commerce registration system including registered capital, as part of government ways and means to manage the economy, is requisite for adaptation to socioeconomic development in China.

Over the recent years, SAIC has made proactive explorations to innovate the business registration system within its mandate according to law, resulting in rapid development of market players. Since 2008, the whole country has witnessed an over 8% average growth rate of market players. Meanwhile, pilot reform has been conducted in selected localities, with pilot projects in some parts of Guangdong Province attracting extensive public attention in particular. Thanks to their legislative power, Shenzhen and Zhuhai, have basically restructured their industry and commerce registration systems. Dongguan and Shunde have standardized their local government documents to maximize the effectiveness of reform within the existing national legal framework. Since the reform, the number of new market players in Shenzhen and Zhuhai has grown 98.51% and 52.61% year-on-year respectively, while that in Dongguan and Shunde has both gone up by more than 20%. The recently open-for-business Shanghai Free Trade Zone (FTZ) has also carried out relevant reform. The work mechanism of “applying with one form and processing at one window” has markedly increased the number of new businesses, with the number of newly registered businesses in the FTZ increasing by nearly five times over that of the same period last year. These pilot efforts have accumulated useful experiences for reform of the registered capital system, proving that this reform is conducive to optimization of the business operation environment, stimulation of new vitality for development of market players and building up indigenous motivation for economic growth. Different areas in China are also enthusiastically promoting express registration of businesses, which has not only promoted rapid growth of market players nationwide but also made important contribution to the Q3 economic rebound in China.

3. Construct a new model of interim and ex-post regulation by means of easy access but stringent regulation

While relaxing access conditions including registered capital, we will integrate administrative streamlining and power delegation with more vigorous interim and ex-post regulation, so as to develop a new pattern of market regulation that features synergistic departmental regulation, industry self-discipline, public supervision and self governance of market players. (1) Improve the system for announcement of market player credit information: We will construct a uniform system for announcement of market player credit information so that the public in general and government departments can access business registration and credit information in a convenient, timely and comprehensive manner, which in turn will expand public supervision. (2) Reinforce inter-department coordination and cooperation to set up a work mechanism featuring division of duties, mutual cooperation and joint regulation between government departments and thereby effectively transform “focus more on approval than regulation” to “easy access but stringent regulation”. (3) Establish and improve corresponding systems for incentives, warnings and penalties so as to materialize the situation where “any irregularity in one aspect leads to restrictions in all aspects” and thereby raise the cost of non-compliance to all businesses. (4) Strengthen industry self-discipline and business self governance to encourage an enabling atmosphere of honest and compliant business operation.

At present, as is required by the executive meeting of the State Council, SAIC is making intensive efforts to produce recommendations regarding amendment of relevant laws and administrative regulations including the Company Law and the Regulations on Business Registration, accelerate the planning and construction of the system for announcement of market player credit information, optimize relevant work flows and improve systems to ensure steady transition of management work before and after the reform, intensify communication and training to have the reform measures effectively “take root”, further release the reform dividends, stimulate entrepreneurship and catalyze new motivation for growth.

Now, my colleagues and I would like to take your questions.