USCBC Report: Transparency Compliance Insufficient in 2013

China continues to significantly lag in its commitments to promote and implement regulatory transparency measures, according to a new US-China Business Council (USCBC) report. USCBC analysis of the National People’s Congress (NPC), the State Council, and selected Chinese government agencies shows varying levels of compliance with transparency commitments. In particular, key agencies continue fall short of regularly publishing regulations for required public comment periods of 30 days. As the USCBC 2014 Board Priorities Statement notes, a longer comment period of 60 or 90 days would be preferable to ensure full participation and quality of feedback to draft regulations.

Regulatory transparency—including solicitation of public feedback during the creation of new laws and regulations, open government decision-making, and the ability to access information—is consistently cited as a top concern for USCBC member companies in USCBC’s annual survey on the Chinese business environment. In 2013, transparency ranked eighth as a top operating issue for USCBC members.

USCBC’s 2014 transparency report—the sixth since 2009—covers the period of January to December 2013 and monitors the NPC, the State Council Legislative Affairs Office (SCLAO), and selected PRC government agencies’ records in increasing transparency in their rule-making processes. This year’s report shows that China continues to fall short in meeting its commitments in promoting regulatory transparency.

NPC shows mixed, though slightly improved record on transparency

The NPC continues to have a mixed, though slightly improved record of posting draft laws and keeping them open for comment for a full 30-day period. Sixty-six percent of laws passed over a recent 12-month period were published to the NPC website for comment at some point during their drafting processes. Out of nine laws and amendments passed during the 12-month period covered in this update, six were posted to the NPC website for comment at some point during the drafting or revision process, and all but one—the Amendment to the PRC Consumer Protection Law—were posted for 30 days. Although this is an improvement from the 40 percent compliance during USCBC’s previous mid-March to mid-November 2012 tracking period, it still falls short of China’s transparency commitments.

State Council, ministries show inconsistent or worsened record on transparency

The State Council posted less than 10 percent of its own administrative regulations and departmental rules for public comment through the SCLAO, and it published fewer regulations than during the previous tracking period.

Key government agencies did not show significant improvement either. During the 12-month period tracked in this report, none of the seven agencies involved—the National Development and Reform Commission (NDRC), Ministry of Commerce (MOFCOM), Ministry of Finance (MOF), Ministry of Industry and Information Technology (MIIT), General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), State Administration of Industry and Commerce (SAIC), and Ministry of Human Resources and Social Security (MOHRSS)—posted a significant fraction of relevant documents for comment on either the SCLAO or agency websites. According to USCBC analysis, less than 10 percent of regulations were posted to the SCLAO site and less than 17 percent of additional regulations were posted to agency sites.

In general, agencies posting draft rules and regulations to the SCLAO website also posted them to their own websites, but some posted additional draft regulations to their respective agency websites only, failing to submit them to SCLAO. Compliance worsened overall for NDRC, MIIT, and MOHRSS. These agencies generally posted fewer documents during the current tracking period than in the previous period. While MOFCOM, MOF, AQSIQ, and SAIC also posted fewer documents to the SCLAO website, the documents posted for comment to agency websites remained the same or increased.

USCBC recommendations

USCBC welcomes the State Council’s requirements for agencies to solicit public comment on all administrative documents related to commerce and trade, and recommends that the PRC government:

  • Ensure that all administrative regulations and departmental rules are posted on the designated SCLAO information website comment page for the full 30-day comment period. Consider a longer comment period of 60 or 90 days, which would result in better comments for the consideration of government regulators and contribute to improved legislative and regulatory outcomes.
  • Publish a clear definition of the documents covered under the State Council’s transparency commitments that specify the inclusion of documents such as catalogues, measures, standards, and opinions, which often affect industry significantly. The lack of such a definition creates challenges for companies and regulators alike. In this report, USCBC examines regulations under both a narrow definition as well as a broader definition that includes administrative regulations that appear to function as State Council or departmental administrative regulations. None of these regulations are explicitly included in any State Council definition.
  • Explain in detail, and within the bounds of confidentiality, the economic methodology and rationale that underpin administrative reviews and decision-making by central government bodies, including decisions made based on “national economic security” considerations to allow greater transparency in these processes.
  • Create a more organized and comprehensive web-based database of laws and regulations that have been released for comment in order to facilitate annual reviews of progress in transparency from an authoritative source.

By Shelly Zhao

Related Links

USCBC 2013 China Regulatory Transparency Scorecard

USCBC 2013 Chinese Business Environment Survey Results