China Empowers Local Governments to Approve Certain Projects

On December 19, the national government issued the 13th Five-Year Development Plan for Strategic Emerging Industries (2016-2020), detailing targets, major tasks and relevant policies.
Strategic emerging industries are to contribute 15% of GDP (gross domestic product), and five RMB10 trillion-grade (production value) pillar industries are to be established, including new information technologies, high-end manufacturing, biology, green & low carbon products, and digital creativity, giving rise to over one million new jobs annually, in accordance with the plan.
The plan sets eight tasks: 1) propel information technologies and internet economy; 2) strive for new breakthroughs in high-end equipment and new material industries; 3) accelerate innovation and find new growth engines in bioindustry; 4) boost rapid growth of new-energy vehicles, new energy sources, energy conservation and environmental protection industries; 5) promote digital creativity; 6) Advanced layout to help strategic emerging industries be more competitive; 7) accelerate agglomeration development of strategic emerging industries and establish a new harmonious development structure; 8) advance open development of strategic emerging industries and expand international cooperation channels.
A new Approved List of Investment Projects was released by the State Council of China in December 2016, transferring approval authority of 15 items to local governments. This is the third revision to the list after updating it in 2013 and 2014.
Changes related to the energy and chemical industries are as follows:
* Coal based fuels: The Investment Department of the State Council is to approve synthetic natural gas projects boasting a capacity of over 2 billion cubic meters/a, and coal-to-liquids projects with capacity exceeding 1 million t/a.
* Liquefied petroleum gas receiving and storage units (excluding supporting projects in oil and gas fields and in refineries): Such projects will be approved by local governments.
* Receiving, storage and transportation units for imported liquefied natural gas: New projects (including expansion projects) are to be approved by the Industry Management Department of the State Council. Projects with capacity exceeding 3 million t/a will be approved by the Investment Department of the State Council and should be submitted to the State Council for recording. Other projects will be approved by provincial governments.
* Oil and gas pipelines (excluding gathering pipeline network in oil and gas fields): Cross-border and trans-provincial (district, city) main pipeline projects will be approved by the Investment Department of the State Council. Cross-border projects should be submitted to the State Council for recording. Other projects are to be approved by local governments.
* Oil refining: New and expansion projects are to be approved by provincial governments in accordance with relevant plans approved by the central government. Construction of projects unlisted in these plans is prohibited.
* Denatured fuel ethanol: Relevant projects will be approved by provincial governments.
* Petrochemicals: New ethylene, p-xylene (PX) and diphenyl methane diisocyanate (MDI) projects will be approved by provincial governments based on relevant plans made by the central government. Projects not included in these plans are banned.
* Coal chemicals: New coal-to-olefin and coal-to-PX projects are to be approved by provincial governments complying with the central government’s relevant plans. New coal-to-methanol projects of more than 1 million t/a will be approved by provincial governments. Other projects are prohibited.
* Rare earths: Smelting separation and deep processing projects will be approved by provincial governments.
According to the Catalogue for the Guidance of Foreign Investment Industries, restricted projects with a total investment (including capital increase) of US$300 million or above will be approved by the Investment Department of the State Council (lower than US$300 million, to be approved by provincial governments). Projects requiring an investment (including capital increase) of or exceeding US$2 billion should be submitted to the State Council for recording.