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China relaxes business regulations

Environmental, copyright and labor advocates bristle at the looser rules meant to help companies through the economic downturn.

April 29, 2009|Don Lee

SHANGHAI — During hard economic times, American businesses often implore government to ease up on regulations to help them survive. In China, officials are more than happy to oblige.

Need an environmental impact review for your project? No sweat. Compliant regulators are delivering them in as little as three days. And for Chinese law enforcement cracking down on company bosses, the message from higher-ups is clear: Lighten up.

In recent months, government bodies in various places have issued notices or policies calling for authorities to adopt more flexible and soft measures "to help enterprises pass the winter," as one such edict put it.

The business-friendlier approach is ostensibly aimed at growing the economy, preserving jobs and social stability. Thousands of Chinese factories have closed in the last year, putting millions of migrant workers on the streets.

But the vaguely worded orders have drawn fire from some lawyers and rights groups, who fear they will foster a more permissive climate and lead to a rollback of hard-won gains in protecting workers, the environment and intellectual property. Pinched budgets already have taken a toll on private parties that fight piracy and pollution.

"It gives too much freedom for local authorities to interpret the policy, which is not a good thing," said Liu Kaiming, director of the Institute of Contemporary Observation at Migrant Workers Community College in Shenzhen. "I mean, I don't know what kind of small crimes or illegal things would be let go. Is it tax evasion, labor rights, pollution?"

The Industry and Commerce Administration of Zhejiang province, an important economic region south of Shanghai, earlier this year released what local media called the "three noes" policy. Two of the noes have to do with minor licensing and registration issues. The third one, though, states that there should be no punishment for businesspeople who make "common violations that don't directly cause harmful consequences." Instead they should be given suggestions and admonitions to correct their errant behavior, officials said.

In China's southeast industrial hub of Guangdong province, where numerous exporters have shut down factories during the global downturn, the government cautioned investigators about detaining or taking other action against entrepreneurs or key company managers that could disrupt business. Even if authorities have gathered all the evidence, action may be delayed until the manager has finished conducting business.

"In circumstances of minor crimes, it could be postponed at discretion," said the notice, which was issued shortly after the national Ministry of Public Security told economic crime inspectors not to use a heavy hand on high-level managers.

At least five provinces, including Guangdong, Sichuan and Liaoning, say on their websites that government regulators should increase their work efficiency and accelerate the environmental impact review of large projects.

"We should put serving a stable and fast economic development as priority of our environmental protection work," said Wu Xiaoqing, vice minister of the central government's Ministry of Environmental Protection, in remarks posted on the agency's website.

Even during ordinary economic times, giving privileged policies to businesspeople in China is common. Some smaller locales have offered investors immunity for traffic violations and other misdemeanors. But the recent orders at the provincial level and higher speak volumes about officials' concern about keeping people employed.

Even college graduates are struggling to find work as China's economy has been walloped by the recession in the U.S. and Europe. Beijing's massive $585-billion stimulus package is starting to take hold, but economic growth in the first quarter still fell to 6.1%, the lowest on record and below the 8% threshold that some analysts say is needed to create enough jobs to meet society's needs in China.

Company executives welcomed the government's pro-business policies.

"Especially under the current financial crisis, some private companies have weak resistance, so the government should give them more support and reduce pressure on them," said Wu Shouzhong, vice president of Aokang Group, a major shoe manufacturer in Wenzhou, an entrepreneurial city in Zhejiang province.

Wu said, however, that he hadn't noticed local officials loosening up on campaigns to stop activities such as making pirated goods -- an assessment shared by several sellers of fake products and private investigators who work in the field.

The Motion Picture Assn., the international counterpart of the Motion Picture Assn. of America, has long struggled with rampant piracy in China.

Michael C. Ellis, MPA's Asia-Pacific head, says he wouldn't be surprised if the Chinese government, in this economy, pulled back in cracking down on bootleggers of DVDs and other entertainment. But so far, he says, he hasn't seen a change.

That's not the case with labor and environmental groups.

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