Interview on the Amendment and Implementation of Regulations of Tianjin Economic-Technological Development Area (TEDA Regulations)

Correspondent (hereinafter referred to as Q): TEDA Regulations was revised in December 2001, so why revise it again after only one year?

Leading official of the Department of Legal Affairs (hereinafter referred to as A): To answer this question, we should date back to July 1985, when Tianjin Municipal People's Congress took the lead in China to enact the Administration Regulations of Tianjin Economic- Technological Development Area in the form of provincial-level legislation. At that time, since TEDA was at an initial stage, there was no relevant experience to refer to and the relevant national legislation was unavailable. In such a context, the Regulations played a foundation role in China's reform and opening-up and the establishment of administration rules of ruling the foreign related special economic zones according to law and standardizing foreign economic cooperation. With the development of TEDA, the legislation must also keep abreast of the times. Therefore, in March 1993 and December 2001, two amendments were made to the Regulations. Generally speaking, the Regulations should remain stable for there is only one year since the last amendment. Why amend it again? The 2001 amendment was made in the context of China's accession to the WTO and it was a readjustment to the existing foreign related economic laws and regulations with reference to China's commitment to the WTO and in accordance with the requirements of the State Council. Actually, the December 2001 amendment to the Regulations involved only the unification of the different terms for land use tax and fee of foreign-funded as well as domestically-funded enterprises and the modification of two places in the article concerning domestic sales of products of foreign-funded enterprises in the form of import substitution. The present amendment, actually made on the basis of the March 1993 Regulations, should be regarded as normal and necessary, for eight years have passed.

Q: What's the context of this amendment to the Regulations?
A: It took two years to revise the Regulations. The texts have been changed several times, involving adequate discussion and big changes. The Regulations can even be said to have been re-formulated. The whole process was conducted with direct attention from the Municipal Party Committee, the Municipal People's Congress and the Municipal Government. In particular, Party Secretary Zhang Lichang gave important instructions. The main points of the instructions include:

1. This amendment of TEDA regulations is very important. The reform and opening-up has come to such a stage that the relevant laws and regulations should be revised accordingly to keep abreast of the times. 2. TEDA should not only serve as a pioneer of opening-up but serve as an experimental area of reform as well. Many experimental regulations should be tried first in TEDA and then be disseminated to the whole city. TEDA has the responsibility to play this role and the legislation should leave space for TEDA. 3. Future legislation should consider incorporating the successful experiences of reform. In the past people thought Tianjin was not flexible; therefore, the reform should focus on flexibility and we should have the courage to break through whatever that constrains the development of Tianjin. The Regulations should be conducive to improving the competitiveness of TEDA. The Office of legal affairs of the Municipal Government made a lot of coordination efforts according to the instructions of Party Secretary Zhang Lichang, and the Municipal Government passed the draft of TEDA Regulations. Meanwhile, the Standing Committee of the Municipal People's Congress also stepped up its efforts and introduced the present TEDA Regulations before the expiration of the office term of the 13th People's Congress.

Q: The past regulations were all titled Administration Regulations of TEDA, but "Administration" was deleted from the title of the present version. What message does this convey and what difference does this make?
A: This is indeed an important change, which can be understood from several perspectives:
1. The so-called Administration Regulations were mainly applicable to the initial stage of TEDA before 1993 when the economic scale was not large and the task was rather simple: introduction of investment and infrastructure construction. The special policies granted by the State was still functioning and the administration regulations mainly defined the contents of opening up, stipulating what TEDA should and could do, without granting more functions onto it. Now that TEDA has grown up and its gross economy has developed to a considerable scale, the requirements of the State and Tianjin Municipality on TEDA change accordingly. The content of social administration is also added to the functions of TEDA, which has grown towards the direction of a new industrial town. The functions of TEDA become more extensive and focus more on overall regional development. Therefore, the deletion of "administration" and the direct use of the Regulations conveys the message that TEDA has grown up.
2. Before 1993, TEDA was relatively isolated, and the Administration Regulations focused more on internal administrative affairs, but now the situation becomes different, with various state laws, regulations and rules constantly improved and perfected. In addition to internal administration, TEDA needs to keep in line with the legal system of the Central Government and Tianjin Municipality while maintaining its leading position of reform and the vitality of its legal system. Therefore, it is necessary to define the relationship of its power to its superior competent department and to define its code of conduct in a larger social context. As a result, it is no longer appropriate to qualify the Regulations with "administration."
3. The deletion of "administration" embodies the transformation of our concepts of legislation. In the past, the government always stressed on the obligations of its counterpart and its restriction on and administration of its counterpart. This concept was represented in legislation by the presence of "administration" in the title of every law and regulation. As a pioneer of reform and opening-up, however, we should change our concepts of legislation, i.e., change from the original emphasis on restriction and administration to emphasis on the rights and interests of the counterparts, the service to and protection of the counterparts and the restriction of the power of the government itself. This should be the concept underlying all the contents of the Regulations.
4. The Regulations is the local law of Tianjin Municipality. It indicates that the highest power organ of Tianjin Municipality has had a mature overall view of TEDA and a good command of many issues, and is thus able, within its authority, to grant TEDA something of constitutional nature so as to represent the wills of the people of the Municipality and the approach to and characteristics of the development of Tianjin.

Q: What is central to this amendment of the Regulations?
A: To sum up, the core of the present Regulations covers five points: regional orientation, defining of function, high empowerment, commitment to reform and clear responsibility. These contents underlie the five chapters and forty-two articles of the Regulations.

Q: Would you please elaborate on the five points respectively? First, please talk about regional orientation.
A: Orientation can be understood from three perspectives. First, TEDA is an export-oriented economic area, not an administrative area, developed with the principle of "giving priority to the development of the industry, the attraction of foreign investment and export for earning foreign currency and committing to the development of high-tech industry" This orientation is consistent with the original intention of setting up TEDA. Second, TEDA should be built into a representative area of modern port metropolis with highly developed productivity and harmonious economic and social progress. This is the orientation of TEDA in Tianjin Municipality. Third, it is an experimental area of Tianjin to carry out reform and opening-up and establish socialist market economic system. We should actively promote the reform and innovation of the administrative system suitable to this economic system. The exposition of the orientation from these three perspectives defines the demonstrative and leading role of TEDA in Tianjin Municipality, inherits history, points out direction and highlights reform. These contents are covered by the five articles under Chapter I General Provisions. We believe this orientation would remain stable in guiding the development of TEDA for a considerable period.

Q: Please talk about the defining of functions.
A: In addition to the aforementioned function of TEDA as an experimental area of reform, here I would like to emphasize its economic function.
1. Constructing infrastructure and public facilities which are of the first rate both in China and the world and improving both the software and hardware of investment environment.
2. Promoting investment from all entities and individuals in accordance with the state industrial policies and the industrial orientation of TEDA.
3. Encouraging the development of high-tech industries and build up technical innovation bases and bases for transformation of scientific and technological achievements.
4. Developing in an all-around manner the tertiary industry including finance, commerce, education, culture, sport and tourism and encouraging the development of intermediary organs in TEDA.
5. TEDA can grant additional policy support to encouraged industries, apart from the preferential policies stipulated by the state laws and regulations.
Among the above functions, Item 1 and Item 2 were covered by the original Regulations but their scope of application has been expanded. Differentiation with regard to domestic and foreign capital and ownership is no longer relevant. Items 3, 4 and 5 are newly added functions. In particular, one chapter of twelve articles is dedicated to the high-tech industry, which highlights this pioneering function.
In addition, it should be noted that most of the five functions are based on the need and innovation of TEDA during practice. Many policies have already been made available to serve as the ground of these functions. What we do here is to define these contents from the height of local regulations. As these contents are covered clearly in Chapter 3 Promotion of Investment and Chapter 4 Promoting the Development of High-tech Industry, I will not elaborate on this point.

Q: Then how to understand "high empowerment"? This is an issue of common concern.
A: Empowerment is a sensitive issue. It involves the following important points:
1. The Regulations stipulates clearly for the first time that the Administrative Commission of TEDA is "an agency of Tianjin Municipal Government, exercising unified administration over TEDA on behalf of the Municipal Government." The greatest significance of this empowerment is that TEDA is granted with a legal status. With this stipulation, the empowerment of government agencies by the state laws and their scope of authority can be made applicable to TEDA, which has changed the situation marked by unclear legal status of the original administrative commission.
2. In the Regulations, there are 12 articles defining the administrative power of TEDA, of which, three articles stipulate in principle the power of TEDA in land, investment and labor administration. These three articles coordinate with other three local regulations of TEDA and show the logical relationship between the Regulations and other three local regulations. One newly added article is about the unified administration of various social activities and the promotion of the development of various public welfare undertakings in TEDA, which indicates that TEDA is no longer a single-purpose industrial area.
3. The Regulations grants TEDA the power to set up or reshuffle administrative organs and grant corresponding administrative function in accordance with the principle of downsizing and efficiency. This actually grants TEDA the power to restructure its internal institutions.
4. The Regulations adds one article, stipulating that the municipal administrative department should entrust its corresponding administrative organ in TEDA with the relevant administrative functions, and that the administrative organ in TEDA should accept supervision and guidance on its business from its superior competent department so as to improve work efficiency. At the same time, the municipal administrative department shall not set up agencies in TEDA, unless vertical leadership is required according to the stipulations of relevant laws and regulations. This is the greatest empowerment to TEDA. Over many years, the various municipal administrative departments have provided great support to TEDA and maintained a good work relationship with it. Mandatory administration is not contending for power and profit but a responsibility with rights and corresponding obligations. Many technical details should be coped with. TEDA still needs to receive guidance from higher authorities, and mandatory administration should focus on improving administrative efficiency. The article about the non-establishment of agencies should also be associated with mandatory administration. We should coordinate with those departments intending to set up agencies. Business has be done, but the issue is which way is beneficial and efficient.
5. The Regulations authorizes TEDA to register directly the enterprises applying for establishment. If preliminary examination and approval is required, it should be based on relevant laws and administrative regulations and the examination and approval should be conducted in a unified manner in accordance with the relevant regulations of Tianjin Municipality. This is at once empowerment and reform.
6. The Regulations states clearly that inspection on the administrative law enforcement in TEDA should be conducted by the administrative departments of TEDA under the guidance of the municipal departments and under the leadership of the Administrative Commission of TEDA. This point is at once empowerment and standardization of law enforcement.
Empowerment mainly covers these contents, and I will not elaborate on the details. In a nutshell, this empowerment to TEDA by the Municipal People's Congress is the greatest ever since the establishment of TEDA. Accordingly, TEDA also shoulders increasing responsibility.

Q: What in the Regulations embodies reform?
A: Actually, empowerment as mentioned before is reform to a large extent. For example, TEDA is a pilot area for the reform of examining and approving system, and empowerment serves the purpose of reform. For another example, it is stipulated in Article 15 of the Regulations that the hearing system should be practiced by TEDA in making important decisions. This is intended to strengthen democratic supervision. Article 14 stipulates that the administrative affairs should be completed in a prescribed period of time; Article 13 stipulates open administration: the administrative issues should be publicized in media and when the work cannot be done in time, reasons must be given; and Article 23 stipulates that no administrative fees should be imposed on enterprises unless otherwise stipulated by laws or regulations. Determined reform is embodied in all these contents.

Q: What do you mean by "clear responsibility"?
A: In the amendment of the Regulations, one chapter on legal responsibility is added. As mentioned before, power and responsibility are reciprocal. Without the binding of legal responsibility, power may be abused. Therefore, adding this chapter is necessary. The following points should be noted:
1. The laws and administrative regulations mentioned in the present Regulations refer to the laws superior to the present Regulations and have definite meanings. In the execution of the Regulations, the superior laws should be observed if such laws exist.
2. When the administrative conducts violate the Regulations, e.g., the procedure for handling affairs is not made public, the examination and approval is not completed in time, law enforcement inspection is not conducted according to prescribed procedure, arbitrary fee collection, neglect of duty, abuse of power, malpractice for selfish ends, etc., the person concerned should be called to account and be held administratively responsible by the supervision department, the unit and the higher competent authorities. If such conducts constitute crime, the person concerned should be held liable according to criminal law. This chapter actually puts restriction on all the administrative departments of TEDA and its staffs in order to safeguard the investment environment of TEDA.

Q: You have elaborated on the contents of the Regulations, and what is its position in China?
A: It should be said that Tianjin Municipality always takes the lead in China in building up an environment ruled according to law, through the legislation of provincial-level People's Congress, for special economic zones and opening up more space for their development. The forward-looking philosophy behind the legislation, accurate and proper code and connection with international practice ensures the leading position of TEDA. In addition, this amendment of the Regulations has involved a lot of research and study, including overseas study tour, and reference to the successful experiences and effective practices in the advanced areas in China. Many significant issues have been written into the Regulations. Therefore, the Regulations takes a leading position in China.

Q: The Regulations was passed on January 9, but why was it not implemented until March 1?
A: This is a general practice in the legislation of China. As mentioned before, many policy-related contents in the Regulations entail much time for preparation when put into practice and many details need to be considered. For example, is it necessary to formulate detailed rules for the implementation of some stipulations? For another example, to determine whether the technical preparations of unified examination and approval are available, careful study and down-to-earth efforts are needed. Meanwhile, it is also very important to publicize the Regulations and make it known to both outside and inside the area and to the various circles. Leaving time for preparation demonstrates the seriousness of implementing the Regulations.

Q: What is the role of the Regulations in the future development of TEDA?
A: According to the instructions of Secretary Zhang Lichang, the Regulations is promulgated with the objective of improving the competitiveness of TEDA. It is no doubt that the implementation of the Regulations will play a very important role in promoting the development of TEDA. However, the execution of any law depends on people. To implement the Regulations, it is necessary to improve the legal qualifications and law-enforcing awareness and level of the TEDA people. Only with understanding and support from all over the municipality can the Regulations play a material role.

Q: OK, thanks for your explanations. We wish TEDA a greater success.
A: Thank you. Good bye!