Transparency Commitment Check

China is releasing more economic and trade rules for public comment than ever before, but further improvements are needed.by Caitlin ClarkTo improve transparency and promote public participation in government, China pledged in 2008 to release drafts of economic laws and regulations for public comment. In April 2008, the National People’s Congress (NPC) standing committee announced that it would solicit public comments on most draft laws and amendments it reviews. In May, the PRC State Council released regulations that require greater disclosure of government information, and during the June 2008 Strategic Economic Dialogue (SED), China promised to “publish for public comment all trade and economic-related administrative regulations and departmental rules” for at least 30 days on the State Council’s Legislative Affairs Office (SCLAO) information website comment pages.

The US-China Business Council (USCBC) in 2008 began tracking and reporting on China’s efforts to increase transparency and public participation in government. According to USCBC findings, the PRC central government has significantly improved rule-making transparency over the past several years, but further improvements are needed, particularly in the formulation of rules and regulations by the State Council and its agencies.

The NPC fulfills its transparency commitments

USCBC research shows that the NPC has consistently complied with the transparency measures it outlined in April 2008. Draft laws have been released for a 30-day comment period at least once during their standard three rounds of NPC standing committee review. Many observers view this as an important step forward by China’s highest legislative organ to improve transparency.

SED transparency performance remains mixed

The publication of trade and economic-related rules and regulations for comment on SCLAO’s information website has been inconsistent, according to USCBC’s analysis. Though the SED agreement does not define which types of documents fall under “administrative regulations and departmental rules,” a narrow definition based on PRC law would mean that only about one-quarter of the documents (51 of 209) posted for comment or issued from mid-June 2009 to mid-April 2010 were posted to SCLAO’s comment pages, and only three were posted for the full 30 days. This is fewer than during the previous 10-month period, when one-third of the documents (44 of 135) posted for comment or issued were posted to an SCLAO comment page.

Of the 209 documents released for comment or issued, another 51 were posted for comment on the websites of their respective drafting ministries but not on the SCLAO websites. Of these, only 4 were posted for comment for 30 days. In total, roughly 50 percent of the documents (102 of 209) circulated or issued from mid-June 2009 to mid-April 2010 were posted for public comment on SCLAO’s comment pages or their drafting ministries’ websites, and only 7 were posted for the full 30 days. In fact, the average comment period for documents posted during the 10-month period was only 18 days.

If “administrative regulations and departmental rules” is defined more broadly to include other commonly issued documents that significantly affect company operations—such as “opinions” (yijian), “notices” (tongzhi), “guides” (zhiyin), “standards” (biaozhun and guifan), and “catalogues” (mulu)—SCLAO has posted only 9.4 percent of the relevant documents (52 of 551) since mid-June 2009. (The broader definition includes 52 documents posted to the SCLAO comment pages, 158 documents issued or posted on other sites for comment that have terms specified in PRC law as “administrative regulations” and “departmental rules,” and 341 documents issued or posted on other sites for comment that have other commonly used titles. China also issues other types of documents, such as “guidance” and “requirements,” which are not accounted for in this calculation. For a full list of the types of documents included under administrative regulations and departmental rules, see Types of Legal Document Covered in USCBC’s Transparency Tracking.) An additional 47 documents of these types were posted for public comment on their drafting ministries’ websites from mid-June 2009 to mid-April 2010. Taken together, China posted for comment 150 of the 551 documents (27 percent) included in the broader definition on the SCLAO and drafting ministries’ websites.

The frequency of comment solicitation on draft rules and regulations varies greatly among ministries under the State Council. Two departments with fairly consistent records of soliciting comments are the Ministry of Agriculture and the China Insurance Regulatory Commission. These departments posted most of their respective circulated or issued documents for comment on the SCLAO comment pages. The Administration of Quality Supervision, Inspection, and Quarantine; the Ministry of Finance; and the State Administration for Industry and Commerce have poorer records of posting documents. These three agencies collectively posted only 1 out of 33 documents for comment on one of the SCLAO comment pages, and only 3 out of 33 for comment on their own websites.

Challenges to tracking transparency

Tracking the State Council’s and its ministries’ transparency performance is complicated by several factors. First, as discussed above, the SED agreement does not define “administrative regulations and departmental rules,” allowing multiple interpretations of the commitments and multiple ways of measuring compliance. Second, the webpage links to which some administrative items are initially posted expire after a short time, and the regulations can be difficult to locate later. This is particularly common with administrative items released by the Ministry of Finance. Such issues hinder the effectiveness of China’s efforts to improve transparency.

Finally, because there does not seem to be any centrally maintained record of items that have been released for comment, it appears that the only way to verify whether laws and regulations issued for implementation were ever published for comment is to check the SCLAO and departmental websites regularly for the release of new documents—as USCBC does.
China aims to improve transparency

The PRC government has emphasized its commitment to increase transparency. Several 2010 developments pertaining to information disclosure follow.

• State Council requires comment solicitation for all administrative rules and regulations  In a January notice announcing the publication of its 2010 Legislative Work Plan, the State Council for the first time required public comment solicitation for all proposed administrative rules and regulations, including those drafted by various ministries. According to the notice, drafts of administrative documents must be posted for comment on the SCLAO’s information website. This requirement goes beyond China’s SED commitment, which calls for only those documents that are “economic” in nature to be posted for comment.
• Ministries pledge budget transparency at March 2010 NPC and Chinese People’s Political Consultative Conference meetings   Twenty-seven government ministries pledged to make their annual budgets public in 2010. At the end of March, the ministries of Land and Resources, Finance, Science and Technology, and Housing and Urban-Rural Development had made their budgets available online.
• Chinese Communist Party (CCP) steps up transparency efforts  In August 2010, the Political Bureau of the CCP Central Committee released a statement that instructed local party branches to better publicize party affairs. According to the statement, more openness would improve governance and strengthen party supervision. The party should also work to safeguard members’ right to know, participate, elect, and otherwise express opinions to increase involvement in party grassroots organizations.

Next steps for transparency

To further improve transparency and promote greater participation in the legislative process, USCBC has suggested 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. An even longer comment period of 60 or 90 days would be preferable and result in better comments for the consideration of government regulation drafters.
• Consider requiring other documents—such as catalogues, notices, and opinions, which often affect industry significantly—to be posted for public comment, in addition to the rules, regulations, and measures that are currently posted for comment periods.
• Explain in detail, but within the bounds of confidentiality, the economic methodology and rationale that underpin administrative reviews and decisionmaking by central government bodies, including antimonopoly merger reviews, countervailing duty and antidumping investigations and case rulings, and decisions made based on “national economic security” considerations.
• Release for public comment the draft revised Catalogue Guiding Foreign Investment in Industry, which is expected to be under review this year and will impact foreign investment opportunities and restrictions in China.

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Types of Legal Documents Covered in USCBC’s Transparency Tracking

The US-China Business Council (USCBC) has identified more than 500 administrative items since mid-June 2009 that have been circulated or issued by PRC central government agencies but not released for comment on PRC State Council Legislative Affairs Office (SCLAO) comment pages. Of these items, none have used the specific terms referred to in the June 2008 US-China Strategic Economic Dialogue commitment as “administrative regulations” (xingzheng fagui) or “departmental rules” (bumen guizhang). These items may have been posted for comment on their drafting agencies’ or other PRC government websites before USCBC tracking efforts began. PRC law provides some guidelines for how to classify legal documents into these terms, however:

• The PRC Constitution (Articles 89 and 90) stipulates that State Council administrative regulations may be titled “provisions” (guiding), “decisions” (jueding), and “orders” (mingling); departmental rules may be titled “orders” (mingling) and “directives” (zhishi).
• Article 4 of the 2001 Regulations on the Procedures for the Enactment of Administrative Regulations states that State Council administrative items may be titled “regulations” (tiaoli) and “measures” (banfa).
• Article 2 of the 1990 Decision on the Registration of Regulations and Rules states that departmental administrative items may be titled “provisions” (guiding), “measures” (banfa), “rules” (xize), and “general rules” (guize).

If the categories “administrative regulations” and “departmental rules” include documents with all of the above titles, SCLAO has posted on its comment pages roughly one-quarter (51) of the relevant items (209).

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[author] Caitlin Clark is manager, Business Advisory Services, at the US-China Business Council (USCBC) in Washington, DC. Nina Palmer, research associate for Business Advisory Services, contributed to this article, which is adapted from the May 2010 USCBC issues brief, PRC Transparency Tracking. USCBC is the publisher of CBR. [/author]