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Chapter III Investment and Financing Promotion

Article 17 [Original text]

Article 17 The relevant departments of the State Council shall, in accordance with the major national development strategies, development plans and industrial policies, coordinate the study and formulation of policies and measures to promote investment in the private economy, release information on major projects to encourage investment in the private economy, and guide the private economy in investing in key areas. Private economic organizations investing in the construction of fixed asset investment projects in line with the strategic direction of the State shall enjoy the support policies of the State in accordance with the law.

[Interpretation of Provisions]

Background and Purpose of Legislation: The purpose of this Article is to clarify the responsibilities of government departments in guiding and promoting private investment, and to point out the direction of investment for private capital and ensure that it enjoys due policy support through the formulation of policies and the release of information.

Definitions: a. "Relevant departments of the State Council": e.g. the Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, etc. b. "Coordinate the research and formulation of policies and measures to promote investment in the private economy": Requires the systematic design of a policy system at the national level in support of private investment. c. "Publishing information on major projects to encourage investment in the private economy": Establishes a regular mechanism for the release of information on such projects to enhance the transparency and symmetry of the information, and to facilitate private enterprises' access to investment opportunities. private enterprises to access investment opportunities. Such information may include project name, construction content, scale of investment, mode of cooperation, contact channels, etc. d. "Guiding the private economy to invest in key areas": through policy and information guidance, private investment can better serve national strategies and industrial development directions. e. "Fixed-asset investment projects in line with the national strategic directions shall enjoy national support policies in accordance with the law": this is a commitment clause that guarantees that private enterprises can obtain state policy support (e.g., tax preferences, financial subsidies, financing facilities, etc.) on an equal footing with other subjects when investing in projects in line with the national orientation.

[Relevant Regulations]

Regulations and policy documents related to Article 16. Industrial development plans and investment guidance catalogs issued by the competent authorities of various industries.

[Practical Guide]

a. Information Acquisition: Private enterprises should take the initiative to pay attention to investment policies, project information and industrial guidance catalogs issued by the relevant departments of the State Council and local governments, such as the “List of Key Projects Encouraging the Participation of Private Capital” issued by the National Development and Reform Commission (NDRC). b. Policy Struggle: Enterprises should take the initiative to understand and actively apply for relevant national support policies when investing in projects that conform to the direction of the national strategy. When investing in projects in line with national strategic directions, enterprises should take the initiative to understand and actively apply for relevant national support policies. c. Government Responsibility: ● Relevant departments should improve the science and operability of policy formulation to ensure that policies can be effectively implemented. d. Project Information Release: ● Project information should be released in a timely manner. The release of project information should be timely, accurate and comprehensive, and convenient docking channels should be provided. Policies shall be honored without discrimination, avoiding “declaration but not implementation”. d. Project Matchmaking: Local governments, industry associations and financial institutions are encouraged to set up matchmaking platforms for private enterprises and major projects. e. Project Matchmaking: Local governments, industry associations and financial institutions are encouraged to set up matchmaking platforms for private enterprises and major projects.

Article 18 [Original text]

Article 18 Support private economic organizations to revitalize their stock of assets through various means, improve their reinvestment capacity, and enhance the quality and efficiency of their assets. The people's governments at all levels and their relevant departments support the participation of private economic organizations in government and social capital cooperation projects. The government and social capital cooperation projects shall reasonably set up the rights and obligations of both parties, and clarify the way of obtaining investment income, risk-sharing mechanism, dispute resolution and other matters.

[Interpretation of Provisions]

Background and Purpose of the Legislation: Activating stock assets is an important way to improve the efficiency of capital use and expand the production capacity of enterprises. Government and social capital cooperation (PPP) is an effective mode to attract social capital to participate in the construction of infrastructure and public services. The purpose of this article is to support private enterprises to strengthen themselves and participate in public projects through these means.

Article Interpretation:a. Revitalization of stock assets:● "Various ways": e.g., asset securitization (ABS), real estate investment trusts (REITs), equity transfers, asset restructuring, financial leasing, etc. ● "Improve reinvestment capacity, asset quality and efficiency": the purpose of revitalizing stock assets. b. Government-Social Capital Partnership Projects (PPP):● "Support the participation of private economic organizations": encouraging private capital to become the social capital party in PPP projects. c. "Support the participation of private economic organizations": encouraging private capital to become the social capital party in PPP projects. d. "Support the participation of private economic organizations": encouraging private capital to become the social capital party in PPP projects. ● "Reasonably set the rights and obligations of both parties": PPP contracts should be fair and reasonable, and clearly define the responsibilities of the government party and the social capital party. ● "Clarify matters such as the method of obtaining investment returns, risk-sharing mechanisms, and dispute resolution": These are the core terms of a PPP contract and must be clearly agreed upon to safeguard the smooth implementation of the project and the rights and interests of the participating parties. For example, the method of obtaining benefits can be user-pay, government-pay, or feasibility gap subsidy; risk sharing should follow the principle of “the party most suitable to bear the risk”.

Relevant regulations]

a. On revitalization of stock assets: ● CSRC, NDRC and other departments' policy documents on the promotion of infrastructure REITs pilot projects and asset securitization. b. On PPP: ● Measures for the Administration of Infrastructure and Public Utility Franchises. ● Guiding opinions, operational guidelines, model contracts, etc. issued by the Ministry of Finance, NDRC and other departments on promoting the use of the PPP model. ● The Law of the People's Republic of China on Bidding and Tendering (the selection of social capital partners for PPP projects usually requires the fulfillment of bidding procedures).

[Practice Guide]

a. Enterprises to revitalize stock assets:● Private enterprises should sort out their own assets, and for eligible stock assets, they can actively study and try to finance and revitalize them through REITs, asset securitization and other means. ● Seek help from professional organizations (e.g., brokerage firms, trusts, law firms, clubs). b. Enterprises participating in PPP projects:● Pay attention to the PPP project database and promotion information released by the government. ● Carefully study the terms of the project contract, especially the benefits, risks and exit mechanisms, and make a prudent assessment. ● Participate in consortiums with other competent enterprises. c. Government regulation of PPP: ● When implementing the PPP model, government departments should ensure that the selection of projects is scientific, the contract terms are fair, and the performance of the contract is in accordance with the promise. d. PPP: ● PPP should not be disguised as PPP in the name of the government. ● Not to raise debt in disguise in the name of PPP, and to ensure that the project is financially affordable. ● Create a level playing field for private enterprises to participate in PPP projects and shall not set unreasonable thresholds.

Article 19 [Original text]

Article 19 The people's governments at all levels and their relevant departments shall provide standardized, efficient and convenient services for private economic organizations to invest in terms of project promotion and docking, handling of preliminary work and construction approval, access to key elements and government investment support.

[Article Interpretation]

Background and Purpose of the Legislation: Investment projects involve a number of links and government services from intention to landing. The purpose of this article is to put forward a clear requirement for government departments to provide high-quality services in the whole process of investment by private enterprises and optimize the business environment.

Definitions:a. "People's governments at all levels and their relevant departments": clarifies the main body responsible for the provision of services. b. Service links:● "Project promotion and docking": takes the initiative to promote projects with investment value to private enterprises and helps them dock with project and resource parties. c. "Preliminary work and application for landing": helps private enterprises to establish a business environment in which they are interested in investing. d. "Project promotion and application for landing": helps private enterprises to establish a business environment in which they are interested in investing. ● "Handling of preliminary work and construction approval matters": such as the handling of approval and filing procedures for project projects, planning and siting, land use pre-trial, environmental impact assessment, and construction permits. It is required to be standardized, efficient and convenient, and to reduce the approval process and time. ● "Access to factors": Assisting enterprises in solving the problems of securing factors such as land, capital, energy and talents required for project construction and operation. ● "Government Investment Support": For eligible private investment projects, provide convenience in terms of governmental financial support (e.g., guidance funds, special subsidies). c. "Standardized, Efficient and Convenient Services": This is the core requirement for the quality of government services. “Standardized” refers to compliance with laws and regulations and uniformity of standards; ‘efficient’ refers to high efficiency and short cycle time; and “convenient” refers to simplified procedures and ease of application.

Relevant Regulations]

Regulations on Optimizing Business Environment: There are comprehensive provisions on the standardization and facilitation of government services, such as the implementation of one-window acceptance, concurrent examination and approval, time-limited completion, and acceptance with tolerance for shortcomings. Administrative License Law of the People's Republic of China: regulates the setting and implementation of administrative licenses. ● Policy documents related to the “release of administrative services” reform implemented in various regions, such as “running at most once” and “one network to do everything”.

[Practical Guide]

a. Enterprises should make good use of government services: ● Private enterprises should take the initiative to understand and make use of the services and facilitation measures provided by the government in the investment process. They can reflect any unreasonable requirements or delays encountered in the approval process to the relevant departments or the Business Environment Complaint Platform. b. Improvement of service level by the government: ● Governments at all levels should deepen the reform of “release of regulations, management of services”, continuously optimize the approval process, compress the approval timeframe, and reduce the systematic transaction costs. c. Promotion of e-government and implementation of e-government services. Promote e-government, and realize more matters to be done online and in the palm of your hand. Establishing and improving “one-stop” service windows or project handling mechanisms to provide “nanny” services for enterprises. ● Strengthening the training and management of window service personnel to improve service awareness and business capacity. c. Evaluation of the business environment: The implementation of this article is an important indicator of a region's business environment.