Xinhua News Agency, Beijing, July 8th of the month Daily News (Reporters Zhao Chao and An Bei) — For those “red-cap intermediaries” who have repeatedly drawn criticism, the time has come to shed their labels.

The "Overall Plan for Decoupling Industry Associations and Chambers of Commerce from Administrative Agencies," issued by the General Office of the CPC Central Committee and the General Office of the State Council, 8 It was released to the public today. As a guiding document for reforming industry associations and chambers of commerce, the plan—guided by principles such as clarifying functional boundaries and fully leveraging the roles that these associations and chambers should play—provides a clear roadmap, a well-defined timetable, and specific task assignments for the decoupling reform.

Get serious: Achieve complete separation

The various irregularities spawned by “red-cap intermediaries” are not the true nature of industry associations and chambers of commerce. Sun Fengyi, an associate researcher at the Institute for Economic Systems and Management of the National Development and Reform Commission, said: “As a link between the government, the market, and society, industry associations and chambers of commerce should play a positive role in providing decision-making support to the government, serving enterprise development, promoting self-regulation within industries, and innovating social governance—taking on tasks that the market needs but no one is leading, and tasks that the government wants to undertake but lacks the capacity to handle.”

It is understood that China’s industry associations and chambers of commerce numbered fewer than 1,000 at the beginning of the reform and opening-up period. One, developed to 2013 There are over 60,000 industry associations and chambers of commerce, essentially forming a system that covers all sectors and levels of the national economy.

However, under the current context of administrative streamlining and decentralization reforms, the shortcomings of certain industry associations and chambers of commerce have become increasingly apparent. Experts point out that these associations themselves face four major problems: First, they are heavily imbued with administrative characteristics and tend to serve as mere extensions of the power held by administrative authorities; second, their representativeness is weak—many national-level associations cover fewer than half, or even less, of the enterprises in their respective industries; third, their internal structures are unreasonable—some associations persist despite the decline of their industries, while others struggle to establish corresponding associations despite rapid industry growth; and fourth, they lack sufficient capacity for self-development, suffer from incomplete institutional frameworks, and exhibit irregular behavior; some are even overly enthusiastic about conducting arbitrary evaluations and awards.

“Only by removing the ‘red hats’—the government endorsements—from industry associations and chambers of commerce can we sever the chains of vested interests and dependency on official status, enabling them to strengthen themselves through market competition and embark on a path of healthy development,” said Zhang Zhanbin, a professor at the National Academy of Administration.

According to the plan, decoupling will adhere to the principles of socialization and marketization, promoting the autonomous operation, orderly competition, and optimized development of industry associations and chambers of commerce. To achieve complete decoupling, the plan clearly defines “five separations”:

— Separate institutional structures and abolish the relationships of sponsorship, supervision, liaison, and affiliation between administrative agencies and industry associations and chambers of commerce.

— Separate functions: divest industry associations and chambers of commerce of their existing administrative functions, and develop a list of functions that are suitable for them to take on.

— Asset and financial separation: Industry associations and chambers of commerce shall implement the accounting standards for non-profit organizations established by civil society, and adopt independent financial management, effective since 2018. Starting from [year], direct fiscal allocations to national industry associations and chambers of commerce will be abolished.

— Personnel management shall be separated, and industry associations and chambers of commerce shall fully implement the labor contract system. Corresponding reductions in institutional establishment allocations will be made accordingly. Administrative agencies shall not recommend or arrange serving civil servants, nor retired or resigned civil servants, to hold concurrent positions in industry associations and chambers of commerce.

— Separate Party building, foreign affairs, and other related matters; standardize various management relationships; and strengthen comprehensive oversight.

Only by achieving complete separation can we rediscover ourselves and set out with a lighter load. “The decoupling reform will enable us to operate independently, enhance our professionalism and capabilities, provide better intellectual support to enterprises and industries, and promote the transformation and upgrading of our industrial sectors,” said a representative from the China Iron and Steel Association.

Strict Regulation: Decoupling Is Not Detachment from Oversight.

One side is about letting go, while the other side is about managing.

Experts pointed out that decoupling does not mean the government simply abandons industry associations and chambers of commerce to fend for themselves; rather, it calls for strengthening comprehensive oversight and establishing a new type of cooperative relationship.

“This reform comes with a package of supporting and regulatory policies, including increased government support for the procurement of services, strengthened development of association and chamber of commerce management systems and governance mechanisms, and ensuring that decoupling does not mean losing oversight,” said Yang Yiyong, Director of the Institute for Social Development at the National Development and Reform Commission.

As a complementary measure, the plan clarifies support policies for industry associations and chambers of commerce following decoupling, including government procurement of services, tax incentives, sharing of information resources, and participation in assisting government departments with multilateral and bilateral economic and trade negotiations.

Yang Yiyong stated that, based on international experience, using the service procurement approach is a common practice for governments to fund and support industry associations and chambers of commerce. This approach can help these associations and chambers shed their "second-government" status, continuously expand their revenue streams through service provision, and promote their sustainable development.

The reporter learned in the interview that in 2001... The China National Machinery Industry Federation, established in [year], has for many years proactively participated in the formulation and revision of the nation’s macroeconomic policies, development plans, and industrial policies. It regularly submits industry security early-warning reports to government departments, leverages its professional strengths to organize relevant research studies, and has accumulated valuable experience in providing advisory services to the government.

In terms of strengthening management, the plan proposes perfecting the government’s comprehensive regulatory system, leaving no regulatory gaps, and clearly defining the supervisory responsibilities of each department to ensure a “multi-pronged approach.” This includes direct registration and management by civil affairs departments, Party organization management by Party building authorities, specialized management and services provided by functional departments such as foreign affairs, taxation, finance, and auditing, as well as policy guidance from industry regulators. At the same time, the plan also establishes new regulatory mechanisms, including the appointment of supervisors, information disclosure, and annual reporting.

“Enhancing the self-governance capacity of industry associations and chambers of commerce is also an important aspect of regulation. We need to bolster their intrinsic motivation by establishing competition and exit mechanisms, thereby breaking the ‘iron rice bowl’ mentality,” said Yang Yiyong.

Establish rules: Moving toward the rule of law.

The ultimate goal of this reform is to both remove the “hat” and find the right “position”—to guide industry associations and chambers of commerce onto a normal track through the rule of law, enabling them to truly become modern social organizations that practice self-governance in accordance with the law.

The plan has been clearly defined: accelerate the legislative work related to industry associations and chambers of commerce. “We must ensure through legislation that all major legal relationships throughout the entire lifecycle of industry associations and chambers of commerce—from cradle to grave—are governed by clear laws and regulations,” said Liu Junhai, a professor at the Law School of Renmin University of China.

The reporter learned that the Law on Industry Associations and Chambers of Commerce has been included in the legislative work plan of China’s legislative body, and drafting work is currently underway in full swing.

What is even more urgent at the moment is the institutional development of industry associations and chambers of commerce themselves. Liu Junhai pointed out that the articles of association drafted by some industry associations and chambers of commerce today are strikingly uniform, and in some cases, these articles have effectively become ineffective. This is precisely the root cause of the weakened innovative capacity of these associations and chambers of commerce, their failure to exercise self-regulatory functions, and the significant latent risks they face.

The plan stipulates establishing and improving the review and filing mechanism for articles of association of industry associations and chambers of commerce, refining internal management systems centered on the articles of association, and strengthening the systems of general member assemblies, boards of directors, and supervisory boards.

The decoupling reform affects the whole system once a single link is touched. To ensure that the plan is effectively implemented and reflects the comprehensive and coordinated nature of the reform, ten departments—including the Organization Department of the CPC Central Committee, the Office of Institutional Establishment under the CPC Central Committee, the Ministry of Foreign Affairs, the National Development and Reform Commission, the Ministry of Civil Affairs, the Ministry of Finance, the State Administration of Government Offices, and the Administration of Central Government Institutions—have been designated to take the lead in formulating and issuing relevant measures. The file.

In terms of reform implementation, the principle of piloting first and advancing step by step is proposed. According to the plan, the first batch of 100 will begin in the second half of this year. About a dozen nationwide industry associations and chambers of commerce will serve as pilot programs, and this will take effect next June. Complete by the end of the month. In 2016, we will expand the pilot program; in 2017, we will conduct a larger-scale pilot program. After refining the corresponding institutional mechanisms, we will roll out the initiative nationwide.

Sun Fengyi pointed out: “China has a large number of industry associations and chambers of commerce, each with its own unique characteristics in terms of institutions, functions, assets, and personnel. Completing the decoupling reform is a complex and daunting task. Only by daring to confront contradictions and braving treacherous waters can we implement this plan steadily and prudently while remaining firm and decisive.”