HEALING FOR FREE: A patient receives free hematodialysis treatment in the Hefeng Town Health Center, Jiangxi Province, on August 1. Locals' medical bills are covered by a local government-sponsored subsidy program (CHEN ZIXIA)

Peng stressed that it's very difficult to expect self-inflicted reforms from the government. "Now, the government can choose to cancel whatever approval procedures that it wants to cancel. That's bound to be a slow and painful process," he noted.

In the future, an overall review of the legitimacy of all government approval procedures should be carried out to decide what should be retained and what should be canceled, according to relevant laws and the demand from the market, Peng suggested.

Yan Jirong, a professor at the School of Governance with Peking University, held that China's reforms have reached a critical moment. "From now on, any reform will upset a certain interest group. Whatever could be easily reformed has been reformed; the problems left over are the hardest ones to solve," Yan said.

Wang Zhan, President of the Shanghai Academy of Social Sciences, said that the latest round of comprehensive reform is totally different from the reforms in 1978 when China first opened up to the outside world.

"Today, any reform measure would incur mixed feedback because of different appeals from different interest groups. That's why the Chinese Government started with some easy issues that are also widely welcomed, such as giving farmers more rights over rural land and using the value-added tax to replace the business tax. Many people will benefit from these reform measures. Therefore, they are easier to carry out," Wang said.

However, Wang stressed that some reforms have the power to affect or even determine other reforms, such as the fiscal reform, the market-oriented interest rate reform, the creation of a unified transfer market for rural and urban lands, the streamlining of government approval procedures and the establishment of a nationwide credit system. According to him, these are fundamental reforms that others are based on and should be carried out as soon as possible.

"For some controversial reform initiatives, the Central Government can authorize local governments to carry them out on a trial basis," Wang said.

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Some Major Reform Measures Since Late 2013

Transformation of government functions—China is making efforts to ease market maneuverability by reducing the amount of administrative approval procedures required for businesses. Since March 2013, a total of 632 items subject to government approval have been canceled or delegated to lower-level governments. The State Council, China's cabinet, plans to cancel or decentralize an additional more than 200 administrative approval procedures before the end of 2014.

Supporting the private sector, especially small and medium-sized enterprises—On April 23, the State Council decided to encourage private capital to participate in infrastructure construction by opening 80 categories of projects to public bidding, such as railways, ports and information infrastructures. On March 1, business registration restrictions on minimum registered capital, payment deadlines, down payment ratio and cash ratio of registered capital were lifted. The Central Government has made further strides to lessen tax burdens for small and micro businesses. From October 1 to the end of 2015, companies with monthly sales of less than 30,000 yuan ($4,908) are exempt from value-added and business tax. The current benefits apply only to small businesses with monthly sales of less than 20,000 yuan ($3,272). Reform on state-owned enterprises (SOEs) has been accelerated. In July, six SOEs were chosen to experiment with mixed ownership reform.

Fiscal reform—Market-oriented reforms of interest rate and exchange rate regimes have been pushed forward. China removed interest rate ceilings on smaller foreign currency deposits in the Shanghai free trade zone on March 1. The People's Bank of China, the central bank, enlarged the floating band of the renminbi's trading prices against the U.S. dollar from 1 percent to 2 percent on March 17. In July and October, the China Banking Regulatory Commission approved the setup of three private banks in succession to bring more competition to state banking giants. In addition, the country started trials on preferred stocks from March 21. A stock-trading connection between Hong Kong and Shanghai was launched on November 17.

Free trade trial zone—During the past year, the 28.78-square-km China (Shanghai) Pilot Free Trade Zone (FTZ) has made profound achievements in liberalizing trade, boosting foreign investment, innovating financial systems and shifting the government's role from authorization to supervision. A "negative-list" approach, featuring a finite list of restrictions and prohibitions, was adopted to manage foreign investment in the Shanghai FTZ. The 2014 version of the negative list of the Shanghai FTZ has been pared down to cover 139 areas, compared to 190 in 2013. The national version of the negative list is being formulated by the Ministry of Commerce and the National Development and Reform Commission. Customs authorities in Shanghai simplified clearance procedures in the FTZ, and the reform measures are being replicated nationwide. Another FTZ in north China's Tianjin is expected to be approved soon, and Fujian and Guangdong provinces are likely to host the next round of FTZ trials.

(Compiled by Beijing Review)