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Regarding the clearance of the photovoltaic industry! "Regulations on Fair Competition Review": Local governments shall not provide tax incentives, subsidies, etc., without approval.
Recently, the "Regulations on Fair Competition Review" were announced, clarifying 19 policy measures that must not contain certain content from four aspects, establishing a review standard system that covers the entire life cycle of business entities and the entire chain of operations.
The "Regulations on Fair Competition Review" will officially take effect on August 1.
It is worth noting that Article 10 of the "Regulations on Fair Competition Review" clearly states that policy measures drafted by drafting units must not include tax incentives for specific operators, selective or differentiated financial rewards or subsidies, preferential treatment in obtaining factors, administrative fees, government funds, social insurance fees, and other content that affects production and operation costs if there is no legal or administrative regulation basis or if it has not been approved by the State Council.
For a long time, local governments have vigorously implemented investment attraction strategies to optimize industrial structure, cultivate growth momentum, promote economic transformation and upgrading, and increase fiscal revenue. It seems that attracting investment has become the only indicator for evaluating local government officials. Therefore, to attract corporate investment, local governments often issue various preferential policies, such as tax incentives or refunds; subsidies for purchasing, renovating, or leasing factories; subsidies for new equipment purchases; relocation cost subsidies; major project rewards; research and development investment rewards; tax increase rewards; listing rewards, etc.
However, during the development of the photovoltaic industry, some local governments have overly participated and tightly bound the development of the photovoltaic industry to government performance, unwilling to shut down backward production capacity. This directly leads to difficulties in clearing old and backward production capacity, with the reason for not shutting down being that this capacity is directly related to local performance, job opportunities, and tax revenue.
"The clearing of production capacity mainly relies on local governments. I believe that leaving the clearing of backward production capacity to the market will be a quick matter." At the 2024 Photovoltaic Industry Supply Chain Development (Wenzhou) Conference held on July 24, Lin Jianhua, chairman of Foster, stated that for the healthy development of the industrial chain, the government should not protect backward production capacity. "Don't say that if a company goes bankrupt, locals think it's fine. They guarantee it and force banks to lend to them. The clearing process slows down. If left to the market, it will clear quickly."
"In our photovoltaic industry development process, local governments have become too involved and turned many photovoltaic projects into performance projects. Therefore, it is very difficult to terminate performance projects." In this regard, Wang Bohua, honorary chairman of the China Photovoltaic Industry Association, also stated: "The process of clearing old and backward production capacity is very difficult."
On July 30, the Political Bureau of the Central Committee of the Communist Party of China held a meeting pointing out that it is necessary to cultivate and expand emerging industries and future industries. It is essential to vigorously promote high-level technological self-reliance and self-improvement, strengthen key core technology breakthroughs, and promote the transformation and upgrading of traditional industries. Strong and effective support should be provided for developing gazelle enterprises and unicorn enterprises.It is necessary to strengthen industry self-discipline to prevent "involution-style" vicious competition. Strengthen the market's survival of the fittest mechanism and smooth out channels for eliminating backward and inefficient production capacity.
Among them, "preventing vicious competition," "strengthening the survival of the fittest mechanism," and "eliminating inefficient production capacity" are strong calls for today's photovoltaic industry!
After the announcement of the "Regulations on Fair Competition Review," experts suggested that companies carefully review agreements reached with local governments regarding proposed local investment projects. If the preferential measures promised by local governments include tax incentives, financial rewards or subsidies as mentioned above, caution is essential as these measures may be required to be rectified due to violations of the "Regulations on Fair Competition Review," which may lead to companies ultimately being unable to receive expected corresponding rewards after their investments are made.
The original text is as follows
Regulations on Fair Competition Review
Chapter One General Principles
[Article 1] In order to standardize fair competition review work, promote fair market competition, optimize the business environment, and build a unified national market according to laws such as the "Anti-Monopoly Law of the People's Republic of China," these regulations are formulated.
[Article 2] Drafting units (hereinafter referred to as drafting units) involved in drafting laws, administrative regulations, local regulations, rules, normative documents and specific policy measures related to economic activities of operators (hereinafter collectively referred to as policy measures) shall carry out fair competition reviews in accordance with these regulations.
[Article 3] The fair competition review work adheres to the leadership of the Communist Party of China and implements party and state policies and decision-making deployments. The state strengthens fair competition review work to ensure that all types of operators can legally use production factors and participate in market competition fairly.
[Article 4] The State Council establishes a coordination mechanism for fair competition review to coordinate and guide national fair competition review work, study and solve major issues in fair competition review work, and evaluate national fair competition review work conditions.
[Article 5] Local people's governments at or above the county level shall establish and improve mechanisms for fair competition review work to ensure adequate resources for fair competition review work and include funding for fair competition review work in their budgets.
[Article 6] The State Council's market supervision department is responsible for guiding the implementation of fair competition review systems and supervising relevant departments and localities in carrying out fair competition review work. Market supervision departments at or above county level are responsible for organizing implementation within their administrative regions.
[Article 7] Local people's governments at or above county level shall include fair competition review work conditions in assessments related to building a rule-of-law government and optimizing business environments.
Chapter Two Review Standards
[Article 8] Policy measures drafted by drafting units must not contain any content that restricts or indirectly restricts market access or exit:
(1) Illegally setting approval procedures for industries, fields or businesses outside negative lists for market access;
(2) Illegally setting or granting franchise rights;
(3) Limiting operations or purchasing or using goods or services provided by specific operators (hereinafter collectively referred to as goods);
(4) Setting unreasonable or discriminatory access or exit conditions;
(5) Other content that restricts or indirectly restricts market access or exit.
[Article 9] Policy measures drafted by drafting units must not contain any content that restricts free movement of goods or factors:
(1) Restricting goods or factors from other regions or imports from entering local markets or obstructing local operators from relocating goods or factors;
(2) Excluding, restricting or coercing external operators from investing or establishing branches locally;
(3) Excluding, restricting or indirectly restricting external operators from participating in local government procurement or bidding;
(4) Setting discriminatory charges items, standards or subsidies for goods or factors from other regions or imports;
(5) Setting discriminatory requirements for external operators investing locally regarding qualification standards and regulatory enforcement.
Other restrictions on the free flow of goods and factors.
Article 10: Policy measures drafted by the drafting unit shall not contain the following content that affects production and operation costs without legal or administrative regulations as a basis or without the approval of the State Council:
1. Providing tax incentives to specific operators;
2. Providing selective or differentiated financial rewards or subsidies to specific operators;
3. Providing preferential treatment to specific operators in terms of access to factors, administrative fees, government funds, social insurance fees, etc.;
4. Other content that affects production and operation costs.
Article 11: Policy measures drafted by the drafting unit shall not contain the following content that affects production and operation behaviors:
1. Forcing or indirectly forcing operators to engage in monopolistic behavior, or providing favorable conditions for operators to engage in monopolistic behavior;
2. Setting government guidance prices or government prices beyond statutory authority, providing preferential prices to specific operators;
3. Illegally intervening in the price levels of goods and factors that implement market-adjusted prices;
4. Other content that affects production and operation behaviors.
Article 12: Policy measures drafted by the drafting unit that have or may have the effect of excluding or restricting competition may be issued if they meet one of the following conditions, have no less impactful alternatives for fair competition, and can determine reasonable implementation periods or termination conditions:
1. To maintain national security and development interests;
2. To promote scientific and technological progress and enhance national independent innovation capabilities;
3. To achieve energy conservation, environmental protection, disaster relief, and other social public interests;
4. Other circumstances prescribed by laws and administrative regulations.
Chapter Three: Review Mechanism
Article 13: Policy measures proposed by departments shall undergo fair competition review during the drafting stage by the drafting unit.
Policy measures proposed jointly by multiple departments shall undergo fair competition review during the drafting stage by the leading drafting unit.
Article 14: Policy measures proposed by people's governments at or above the county level for issuance or submission to their respective people's congresses and their standing committees for deliberation shall undergo fair competition review during the drafting stage by the market supervision management department of the people's government at this level in conjunction with the drafting unit. The drafting unit shall conduct a preliminary review and submit the draft policy measures and preliminary review opinions to the market supervision management department for review.
Article 15: The state encourages regions with conditions to explore establishing cross-regional and cross-departmental fair competition review work mechanisms.
Article 16: Conducting fair competition reviews should involve listening to opinions from relevant operators, industry associations, chambers of commerce, and other stakeholders regarding the impact on fair competition. If it involves public interest, public opinions should be solicited.
Article 17: Conducting fair competition reviews should follow the review standards stipulated in these regulations, assess impacts on fair competition, and reach a review conclusion.
If applicable under Article 12 of these regulations, it should be detailed in the review conclusion.
Article 18: Policy measures that have not undergone fair competition review, or those deemed in violation of Articles 8 to 11 of these regulations after fair competition review and do not meet conditions under Article 12 shall not be issued.
Article 19: Relevant departments, units, and individuals must keep confidential any state secrets, commercial secrets, and personal privacy they become aware of during the fair competition review process according to law.
Chapter Four: Supervision and Guarantee
Article 20: The State Council's market supervision management department strengthens supervision and guarantee for fair competition review work, establishing sound mechanisms for random checks, handling reports, supervision inspections, etc.
Article 21: The market supervision management department establishes sound mechanisms for random checks on fair competition reviews, organizing random checks on relevant policy measures; if violations of these regulations are found during verification, it should urge the drafting unit to rectify.
The market supervision management department should report random check situations to its respective people's government; results can be made public.
Article 22: Any unit or individual may report violations of these regulations regarding policy measures to the market supervision management department. Upon receiving a report, the market supervision management department should handle it promptly or forward it to relevant departments for processing.
The market supervision management department should publicly disclose contact numbers, mailboxes, or email addresses for accepting reports.
Article 23: The State Council regularly supervises local people's governments at or above the county level regarding their construction of fair competition review work mechanisms, implementation of fair competition reviews, handling of reports, etc. The State Council's market supervision management department is responsible for specific implementation.
Article 24: If a drafting unit fails to conduct fair competition reviews as stipulated in these regulations and does not rectify after being urged by the market supervision management department within a specified time frame, higher-level market supervision management departments may conduct interviews with its responsible persons.
Article 25: If failing to conduct fair competition reviews as stipulated in these regulations results in serious adverse effects, disciplinary actions shall be taken against responsible supervisors and other directly responsible personnel of the drafting unit according to law.
Chapter Five: Supplementary Provisions
Article 26: The State Council's market supervision management department shall formulate specific implementation methods for fair competition reviews based on these regulations.
Article 27: These regulations shall take effect from August 1, 2024.
[The Chinese government website announced on July 31 that there are four aspects and nineteen policies that must not be included when drafting measures.].
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