Cabinet calls for further deregulation and “going abroad” to support industry development

The State Council held an executive meeting yesterday, pledging to further reduce government administration and regulations to boost entrepreneurial activities and support employment. Meanwhile, the cabinet vowed to push forward its “One Belt, One Road” (OBOR) development strategy and encourage domestic enterprises to “go abroad” to increase exports of goods and services. At the meeting, the State Council also decided to launch a pilot program allowing income tax credit for individuals who buy health insurance products to boost the development of commercial health care services.

Further deregulation to boost entrepreneurial activities. At the executive meeting, the cabinet vowed to accelerate deregulation reforms and abolish government approvals for some affairs especially for private-dominated investment projects. Meanwhile, the central government reduced official vocational/occupational qualification certificate requirements to lower the threshold for working and boost employment. The cabinet also said it will restructure government special administrative fees and special funds to reduce burden for enterprises and further reform business registration system to boost the development of small and micro businesses. We believe all these policies will help boost the entrepreneurial activities and facilitate the stability of employment.

More support for enterprises to “go abroad”. The State Council said at the meeting it will push forward its OBOR development strategy with more support for domestic enterprises to “go abroad”. Both state-owned enterprises and private businesses, especially in railway transport, power, telecommunication, construction materials and machinery equipment industries, are encouraged to participate in infrastructure construction and technology transfer activities in foreign countries. The cabinet encouraged market-based financing innovation, flexible allocation of foreign exchange reserve and more export-credit insurance to support enterprises to “go abroad”.

In the long term, the strategic implementation of OBOR will expedite infrastructure build-up in the Asia-Pacific region, into a unified logistic network covering air, land and sea transport. It should promote the free and orderly movement of input factors and optimisation of resource allocation across national borders; accelerate regional economic integration and deepen market consolidation; increase the areas of common interests among countries in the region; mitigate international conflicts in the region; enhance the economic influence and market space of the region; and profoundly impact global economic, trade and investment status quo. The OBOR projects will bring economic and trade cooperation between China and Asia-Pacific countries to a new level, fuel cross-border trade and investment, spur the reconfiguration of the Asia-Pacific industry chain, expedite the “Going Global” initiatives of Chinese enterprises, and promote the cross-border investment and financing activities in China and other related regions.

Income tax credit for health insurance purchasers. The State Council decided at the meeting to launch a pilot program for individual income tax credit for purchasers of health insurance. According to the plan, health insurance purchasers will receive an annual income tax credit of no more than RMB2,400 (deductible from taxable income before tax). This policy will stimulate the demand for ordinary health insurance products and indirectly encourage the development of health care service in the medium to long term.