China publishes government investment regulation

A regulation on government investment is set to be implemented starting July 1 after being passed at the 33rd executive meeting on Dec 5, 2018, according to a decree from the State Council propagated on May 5.

The regulation is expected to increase government investment efficiency and stimulate vitality from social investors. "Government investment" refers to those investments on fixed assets by budget within Chinese territory, including newly constructed projects, extended construction and technological renovation.

Investment capital should be put into areas where the market is inefficient in allocating resources, such as public welfare services and facilities, agricultural industry, environmental protection, major technological projects and State security.

The State should improve related policies and measures to exert positive effects on investment funds in order to encourage social capital to go into areas mentioned above. Moreover, the State should establish a regular appraisal mechanism to optimize investment direction and structure.

Government investment should accommodate economic and social development and fiscal revenues, the decree said, and the State should enhance restraint on investment budgets.

The investment funds should be arranged according to specific situation of projects, and in line with divisions of responsibility between central and local governments.

Direct investment will be adopted as the main approach, and various investors should be treated equally with no discriminatory conditions, it said.

Government departments responsible for investment duties at each level should formulate an annual investment plan that contains project name, scale, construction period and related items.

Invested projects should abide by this and any other law and regulation, otherwise no construction should be started, the decree said.