The General Office of the National Development and Reform Commission ("NDRC") has recently distributed the Circular on Matters Concerning Strengthening Oversight of Investment Projects for Urban Rail Transit Vehicles (the "Circular").
The Circular sets forth detailed requirements in four respects, including "enhancing the monitoring and early warning of production capacity", "optimizing regulation of investment projects", "accelerating the industrial restructuring" and "promoting the regulated development of industries". Further, the Circular notes that provincial development and reform commissions shall make improvements to the rules and procedures applicable to filing a record for an investment project, fully implement the project code system, and enact administrative measures for projects seeking investment in urban rail vehicles and their traction, braking and signal systems. In addition, the Circular clearly underscores the need to place a strict control over the new capacity of urban rail vehicles, stating that it is prohibited from increasing the production capacity for urban rail vehicles in an area where the capacity utilization rate of urban rail vehicles is less than 80 percent. Where an enterprise that applies for a construction project to expand the capacity for urban rail vehicles, its capacity utilization rate shall be more than 80 percent in the preceding two years. Furthermore, the Circular requires enhanced technical requirements for investment projects, stating that provincial development and reform commissions shall intensify administration of investment projects for urban rail vehicles and the traction, braking and signal systems.