Less than a year after the implementation of the previous version of the Catalogue of Investment Projects Approved by the Government, the State Council announced the revised new catalogue on November 18. In the new version of the Catalogue, 38 items of approval authority have been cancelled and delegated. As a result, the number of approved projects will be reduced by a further 40 per cent.

It is worth noting that the projects cancelled this time include steel, non-ferrous metals, cement, fertilizers and many other industries with obvious excess capacity.

Li Zhongjuan, deputy inspector of the Industrial Coordination Department of the National Development and Reform Commission, introduced that the cancellation of approval in these areas and the implementation of the record are mainly due to the fact that the state's measures to curb new production capacity have shown results, and the market environment that forced the exit of excess production capacity has initially formed. Adjustment and transformation and upgrading will play a role. Although the approval has been cancelled in the investment catalogue, according to the "Guiding Opinions of the State Council on Resolving the Contradiction of Serious Overcapacity", all localities and departments are not allowed to record new production capacity projects in the above-mentioned industries in any other name or in any way.

Wang Jun, an analyst at the National Information and Economic Forecasting Department, said in an interview with reporters that it is very difficult for the government to delegate power in the investment field that is under control.

Resolve overcapacity and rely on market forces

Nearly 10 years after the implementation of the 2004 version of the "Catalogue of Investment Projects Approved by the Government", in December last year, the State Council announced the newly revised "Catalogue", a total of 49 items of approval authority were cancelled, delegated and transferred. When the catalog was released, the relevant person in charge of the National Development and Reform Commission said that this revision temporarily retained some projects that are not yet eligible for cancellation and decentralization.

The executive meeting of the State Council held on October 8 this year decided to revise the list of investment projects approved by the government again to promote effective investment and entrepreneurship. It also determined three principles: further reducing the scope of approval, further decentralizing approval authority, and further improving supervision.

After more than a month of deliberation, the new version of the "Catalog" was finally officially announced on the 18th. On the basis of last year's revision, this catalogue has cancelled and delegated 38 approval powers. The first is to cancel the approval of urban construction projects such as steel, non-ferrous metals, cement, fertilizer, shipbuilding facilities, and urban water supply, and change to record management. The second is to integrate thermal power stations, thermal power stations, pumped storage power stations, new port areas, general airports, expansion of military-civilian airports, expansion of primary oil refining, iron ore development, and new ethylene projects, as well as some hydropower stations, power grid engineering, aircraft manufacturing and other projects , decentralized to provincial or local governments for approval.

It is not difficult to see that there are many industries with overcapacity among the projects approved this time, which inevitably makes people worry about whether the cancellation of the approval system will lead to further expansion of production capacity in these industries.

The answer given by Li Zhongjuan is no. She said that since the State Council issued the "Guiding Opinions on Resolving the Contradiction of Serious Overcapacity" last year, efforts to curb new production capacity have begun to yield results.

In the first nine months of this year, fixed asset investment in overcapacity industries such as steel, cement, electrolytic aluminum, and flat glass fell by 5%, 14.4%, 31%, and 6% year-on-year, respectively. Moreover, the newly increased investment is mainly used for continuing projects, and is invested in some structural adjustment, energy saving and emission reduction and product deep processing projects.

Li Zhongjuan introduced that the market environment forcing the withdrawal of excess capacity has initially taken shape, and the market demand for industries with excess capacity has entered a plateau. "The profit margin of sales revenue in the steel industry from January to September was 0.71%, electrolytic aluminum was -3.73%, and other similar industries were basically low-profit or not profitable, so the willingness of enterprises to expand production capacity was significantly weakened." She said.

99% of overseas investments are cancelled

Another notable change in the new Catalogue involves outbound investment.

The Catalogue, revised last year, stipulates that Chinese foreign investment projects of US$1 billion or more must be approved by the investment authority of the State Council. In the new Catalogue, this provision is abolished, and only the approval of projects involving sensitive countries and regions and sensitive industries is retained.

The "Administrative Measures for the Approval and Filing of Overseas Investment Projects" issued in April this year just raised the approval threshold from US$10 million to US$1 billion.

"Except for a few projects with special regulations, the approval of overseas investment projects will be cancelled this time." Gu Dawei, director of the Foreign Investment Department of the National Development and Reform Commission, summed up the core of this reform in one sentence. He introduced that according to the data in 2013, according to the current regulations, about 99% of the projects have been cancelled and changed to filing.

Gu Dawei believes that there are three reasons for the big step in liberalizing the approval of overseas investment: first, the need for reform of China's economic investment system, second, to promote the implementation of corporate investment decision-making autonomy, and third, to integrate more deeply into the global economy.

In 2013, my country's actual use of foreign capital was 117.586 billion US dollars; in the same year, China's overseas investment was 107.8 billion yuan.

Gu Dawei estimates that China's foreign investment may exceed 120 billion U.S. dollars this year. With the reinvestment of Chinese overseas corporate entities in third places, this number may be close to or exceed the scale of overseas investment in China.

my country is changing from a capital inflow country to a capital outflow country, and high-value overseas investment projects are increasing. Wang Jun believes that canceling the approval in this context and strengthening the supervision during and after the event is to leave the decision-making power of investment to enterprises, and rely on the market to promote the pace of capital going out.

"We also believe that the cancellation of the approval of overseas investment projects this time means that the pace of enterprises going global will be further accelerated in the future." Gu Dawei said.