Monetary Policy

Opinions of the General Office of the State Council on Accelerating the Development of Airplane Leasing Industry

 Issue [2013] No.108
  People’s governments of provinces, autonomous regions, and municipalities directly under the central government, ministries and commissions of the State Council, organizations directly under the State Council:
  As a producer service supporting the growth of aircraft industry, airplane leasing is an important correlative industry for aviation manufacturing, air transportation, general aviation, and finance. Since the inception of the new century, China’s airplane leasing industry has witnessed rapid growth and remarkable achievements. However, due to late start and incomplete internal and external environment, the country’s airplane leasing industry still lags behind developed countries. Problems such as inadequate core competitiveness of enterprises, defective policy measures, and weak industrial linkage remain prominent. With the advancement of the cause to build a moderately prosperous society in all aspects, airplane leasing industry has enormous development potential. To promote implementation of the “big airplane” strategy, accelerate transformation & upgrading of manufacturing industry, improve air service ability, and optimize allocation of resources, the State Council approves and proposes the following suggestions on expediting the development of airplane leasing industry:
  1. Seize favorable opportunities to speed up the development of airplane leasing industry.
  Accelerated development of airplane leasing industry helps bulk up aircraft fleet, improve air service ability, enhance comprehensive emergency response capacity, optimize allocation of financial resources, and promote financial business diversification and balance of international payment. Therefore, it is of practical and far-reaching strategic significance to promote the development of airplane leasing industry. In recent years, China’s aviation market experienced rapid expansion and gradually became the most important new aviation market in the world. The next ten to twenty years will be a critical period for China to exploit the big airplane market and transform and upgrade the aviation industry. It will also be a golden period for the country’s airplane leasing industry. Currently, with China at a crucial stage of transforming economic development modes and fostering strategic new industries, favorable opportunities should be seized to ensure accelerated development of airplane leasing industry.
  2. Implement the “three-step” strategy in an all-round way.
  On the guiding principles of the 18th CPC National Congress and 3rd Plenary Session of the 18th CPC Central Committee, measures are required to deepen reform and opening up, and utilize resources from both international and domestic markets. Enterprises need to play the principal role. Efforts will be made to strengthen policy support; encourage various enterprises and capitals to enter the airplane leasing sector; improve the core competitiveness of airplane leasing enterprises; and promote coordinated development of airplane leasing, aviation manufacturing, and air transport industries. The following “three step” strategy will be put in full operation:
   Prior to 2015: Take national conditions into consideration, respect the law of the market, draw experiences from international practice, and concentrate efforts on creating a favorable policy environment for the development of airplane leasing industry. 
   2015-2020: Further optimize the development environment, step up government guidance, cultivate leading enterprises, and support airplane leasing companies in consolidating and expanding domestic market and tapping international market. 
   2020-2030: Create industrial clusters for airplane leasing, develop multiple airplane leasing enterprises with global competitiveness, and build China into an important distributing center of airplane leasing. 
  3. Take policy measures to promote the sound development of airplane leasing industry.
  Improve management of purchase and leasing. Airplane leasing enterprises have independent decision-making rights and are permitted to order imported aircraft directly. In accordance with their respective division of functions and relevant regulations, the departments concerned examine and conduct relevant formalities for the airplane leasing enterprises that order and import airplanes from abroad. 
  Step up financing. Eligible airplane leasing enterprises are supported to broaden channels of financing and raise funds by issuing financial bonds, corporate bond, short-term financing bonds and medium-term notes, and by means of asset securitization. Private equity funds, venture capital funds and insurance funds are encouraged to flow into the airplane leasing industry. 
  Improve fiscal and taxation policies. The airplane leasing enterprises that import aircrafts under general trade items and lease the aircraft to domestic airlines enjoy the same preferential tax policy available to the airlines that import aircrafts. For the time being, the stamp tax generated from aircraft purchasing in purchases & sales contracts is not levied on airplane leasing enterprises that are less than 5 years old. 
  Tap international market. Airplane leasing enterprises are provided with support as they expand global business through overseas investment, merging, and reorganization. The advantages of Hongkong being an international center of finance, trade and shipping must be exploited to the full. Airplane leasing enterprises are encouraged to establish special companies in Hongkong to develop overseas market and enhance internationalization.
  Intensify risk prevention and control. Construct a supervision mechanism that features appropriate prudence, joint coordination, and high efficiency. On the basis of independent decision-making and assumption of risk, airplane leasing enterprises are supervised and urged to deepen reform, perfect governance structure, improve professional technical capability, reinforce internal control, master relevant laws and policies, and correctly estimate the market situation so as to avoid major decision-making mistakes and systematic risks. 
  Complete supporting conditions. Great efforts are required to develop professional supporting services, such as accounting, audit, tax administration, insurance, assessment, consultation, proxy, customs clearance, litigation, arbitration, and aircraft maintenance services. The management of airplane exit & entry, nationality registration and airworthiness is to be improved. Policy support regarding the special supervision areas of customhouses must be examined and innovated. It is necessary to improve laws and regulations in terms of airplane asset registration, trusteeship, transaction, and disposal. The pace of building and expanding the airplane transaction market need to be quickened. Airplane leasing enterprises are encouraged to conduct homemade aircraft leasing business. Organizations in the industry should serve as bridges and bond to strengthen self-regulation.
  Support early and pilot implementation. The industrial advantages of Tianjin Binhai New Area, Shanghai Pudong New Area, and Shenzhen-HongKong Modern Service Industry Cooperation Zone in Qianhai have initially taken shape and should be brought into full play. Various measures, such as measures about airplane leasing enterprises in the three areas drawing risk reserves, should be studied and explored. Certain measures can be experimented and tried first on the precondition that risks are controllable. 
  It is important for government of all regions and the departments concerned to fully realize the great significance of accelerating airplane leasing industry growth, emancipate the mind, unify the understanding, enhance the awareness of viewing things from broader perspectives, promote coordination and communication, exert prudential regulation according to law, and unite in work to promote sustainable and sound development of airplane leasing industry in China.