Implementation Opinions of Shanghai Municipal People's Government on Deepening the Interdepartmental Joint Regulation Featuring Random Selection of Inspectors and Inspection Targets and Prompt Release of Inspection Results in Market Oversight in This Municipality

(SMPG G [2024] No. 6)

Attention: all District People's Governments, and all Commissions, Offices and Bureaus (Administrations) of the Municipal People's Government:

To thoroughly implement the Opinions of the State Council on Comprehensively Implementing the Interdepartmental Joint Regulation Featuring Random Selection of Inspectors and Inspection Targets and Prompt Release of Inspection Results in Market Oversight (SC G [2019] No. 5), promote the reform of comprehensive cross-departmental oversight, and foster a market-oriented, law-based and internationalized business environment, the following implementation Opinions are hereby put forward for carrying out interdepartmental joint regulation featuring random selection of inspectors and inspection targets and prompt release of inspection results in market oversight in this Municipality:

I. Consolidating Institution Construction of Random Inspection

1. Comprehensively Deepening the Reform of Regulation Featuring Random Selection of Inspectors and Inspection Targets and Prompt Release of Inspection Results

In accordance with the state council deployment, random selection of inspectors and inspection targets and prompt release of inspection results shall be taken as the basic means and methods of market oversight. Except for special key fields, in principle, all administrative inspections shall be conducted through random inspection of inspectors and inspection targets. Inspection must not be arbitrary and a normalized regulatory mechanism featuring random selection of inspectors and inspection targets and prompt release of inspection results shall be formed.

While random selection of inspectors and inspection targets and prompt release of results are effectively implemented, individual cases shall also be properly handled. For clues of violations in individual cases discovered through complaints and reports, transfer and assignment of case handling, and data monitoring, inspections and handling shall be conducted promptly in accordance with law. For an individual case that needs to be placed on file, investigation and handling shall be proceeded in accordance with law. A problem-oriented approach shall be adhered to during the market oversight. For widespread issues and significant risks affecting market order, which are identified through the above channels, inspections shall be conducted in a pertinent manner through random inspection and other methods to strengthen the prevention of systemic and regional risks.

2. Formulating the List of the Matters Subject to Random Inspection

All relevant departments shall formulate their own lists of the matters subject to random inspection in accordance with laws, rules and regulations. The basis, subjects, content, and methods of the random inspections shall be made clear in the list. The Municipal Administration for Market Regulation, jointly with the relevant departments, shall formulate the list of the matters subject to joint random inspection (hereinafter referred to as the "joint inspection"), the standard and implementation procedures in light of the actual situation of this Municipality. At the municipal level, the list of the matters subject to random inspection shall be constantly improved and renewed. All district people’s governments shall incorporate the items on the municipal list to the fullest extent to formulate their own lists of the matters subject to joint inspection in market oversight.

The list of the matters subject to random inspection and the list of the matters subject to joint inspection can both be categorized into key inspection items and general inspection items. For key inspection items which focus on areas such as safety, quality, and public interest, no upper limit is set on the proportion of random inspection. If the proportion is high, a random selection may be performed to determine the order of inspection batches. For general inspection items which pertain to general regulatory fields, a cap shall be set on the proportion according to the actual regulatory situation. Stringent control must be exercised over both the quantity of key inspection items and the proportion of random inspection for general inspection items.

The list of the matters subject to random inspection and the list of the matters subject to joint inspection shall be dynamically adjusted in accordance with the enactment, amendment, repeal, and interpretation of laws, rules and regulations, as well as actual work situations, and promptly disclosed to the public through platforms such as the National Enterprise Credit Information Publicity System (Shanghai) (hereinafter referred to as the "Publicity System") and government websites. For items identified in this Municipality’s cross-departmental comprehensive supervision key industry list that meet the conditions for random inspection, they shall be included in the joint inspection list and a dynamic update mechanism shall be established. For items not included in the random inspection or joint inspection lists, both inspections shall not be conducted without prior authorization. For those already on the lists, except under special circumstances, at least one random inspection or joint inspection shall be organized annually.

3. Establishing and Improving the "Two Lists" for Joint Inspection

The list of inspection targets subject to random inspection and the list of enforcement inspectors that cover all levels of this Municipality and correspond to the inspection items shall be established and improved in a coordinated way. In accordance with the provisions of laws, rules and regulations, and the principle that "department that permits and is in charge of the case shall supervise it", the list of inspection targets subject to inspection shall be formulated and categorized by the responsibilities among departments. The list of inspection targets subject to inspection may include such market participants as enterprises, individual industrial and commercial households, and farmers' professional cooperatives, and products, projects, behaviors or otherwise. The list of enforcement inspectors shall be established both on the municipal and district level. It shall include all relevant administrative law enforcement civil servants, staff with administrative law enforcement qualifications, and personnel engaged in daily supervision work. The inspectors shall be categorized and labeled according to law enforcement qualifications and professional expertise to enhance professional law enforcement of the inspections. For random inspections in specific fields, in addition to meeting the requirements for the number of law enforcement inspectors, participation from testing institutions, research institutes, and experts and scholars can be included, to meet the needs of such inspections in professional fields by soliciting experts' advice and other relevant means.

Dynamic management of the list of inspection targets subject to inspection and the list of enforcement inspectors shall be implemented according to the changes in the inspection targets and enforcement inspectors.

4. Improving the Joint Inspection System

The "Joint Inspection" subsystem, built upon the "Internet + Regulation" system in Shanghai, serves as the fundamental operational platform for implementing the joint regulation featuring random selection of inspectors and inspection targets and prompt release of inspection results in market oversight in this Municipality. The "Joint Inspection" subsystem shall be continuously enhanced to be aligned with the actual needs of departmental joint inspections. Various random inspection and examination procedures in the subsystem such as plan formulating, list selection, prompt release of inspection results, and data archiving shall be further improved to provide technical support for the inspection, publicity of results, and for the comprehensive application of findings. The full coverage and normalization of the random selection of inspectors and inspection targets and prompt release of inspection results shall be promoted and a traceable process for joint inspections with accountable responsibilities shall be gradually achieved. The application of intelligent tools like mobile regulation and law enforcement recording devices, and intelligent supervision methods such as distance regulation, real-time regulation and non-on-site regulation, shall be actively explored to enhance the technical support for regulation and further improve the efficiency of the inspection process.

All departments of the Municipal People's Government that develop their own random inspection systems shall ensure information sharing and connectivity with the "Internet + Regulation" system. They shall promptly and accurately share inspection results or otherwise generated by their departments with the "Internet + Regulation" system to advance the information of inspection been uniformly collected and fully disclosed.

5. Strengthening the Credit Incentive and Restraint Mechanism

The random selection of inspectors and inspection targets and prompt release of inspection results shall be encouraged to link up with the social credit system. The credit information from joint inspections shall be incorporated into the social credit records of the inspection targets subject to random inspection as an important reference for administration thereof. A problem-oriented approach shall be adhered to. Tiered and categorized dynamic regulation shall be implemented in accordance with the credit status of the inspection targets. The proportion and frequency of inspection shall be linked to the credit rating level and the risk level to enhance the accuracy of regulation. The proportion and frequency of random inspections of market participants with relatively sound credit and relatively low risk may be reasonably reduced, to reduce the impact on normal production and business operation; random inspections of market participants with general credit risks shall be conducted on the basis of the regular proportion and frequency; and the proportion and frequency of random inspections of market participants that are dishonest illegally and have relatively large risks shall be appropriately raised. Enterprises with administrative sanction records in the past three years or with frequent complaints and reports that are verified, and enterprises, industries and fields that are prone to violations of laws, rules and regulations shall be included in the key targeted inspections. The proportion and frequency of random inspections of these enterprises shall be raised. For issues found during inspections, a thorough investigation and legal punishment shall be conducted, and the results of the investigation and punishment shall be recorded under the name of the corresponding market participant to form a long-term restraint on illegal and untrustworthy behavior. Through the comprehensive promotion of joint regulation featuring random selection of inspectors and inspection targets and prompt release of inspection results in market oversight, the credit awareness and self-restraint of market participants shall be enhanced, and violators shall be strictly punished. The intervention in the normal production and operation activities of market participants shall be effectively constrained, and those who abide by laws shall not be disrupted where no violation occurs.

II. Standardizing the Random Inspection Work Process and Methods

1. Coordinating to Formulate the Annual Joint Inspection Plan

All district people's governments shall coordinate to formulate the annual joint inspection plan in light of actual situation of their jurisdiction and the requirements of the relevant competent departments in charge of industries before the end of the first quarter of each year. For inspections that are not included in the annual joint inspection plan but need to be added due to actual work requirements, or those that are included but need to be canceled due to actual work requirements, dynamic adjustments shall be made and updated promptly. The annual joint inspection plan and its updates shall be disclosed to the public through such platforms as the Publicity Systems and government websites within five working days from the date of its formulation.

The matters subject to random inspection and the departments that initiate and participate in the random inspection shall be scientifically determined in the annual joint random inspection plan to achieve the goal that multiple checks can be done in one inspection. For several inspection matters concerning the same market participant, they shall, in principle, be completed in one inspection to enhance efficiency and reduce the cost of the market participant due to the inspection. The proportion and frequency of the random inspection and the probability of being inspected shall be reasonably determined and dynamically adjusted in accordance with laws, rules and regulations, and the actual situation of the economic and social development, regulatory areas, and law enforcement teams in the jurisdiction. This ensures both the coverage of the random inspection and the regulatory effect while preventing arbitrary inspections and repeated inspections that would harass the normal production and operation activities.

2. Implementing the Random Inspection in a Scientific Way

All district people's governments shall organize and lead the joint regulation featuring random selection of inspectors and inspection targets and prompt release of inspection results within their jurisdictions in accordance with the annual joint inspection plan. The inspection targets are randomly selected from the list of the inspection targets subject to random inspection in a public and fair manner based on the fields involved in the inspection and the participating departments. Enforcement inspectors are matched randomly in light of the actual situation and the local conditions. Joint inspections may be conducted through field verification, written examination, and online monitoring. For areas involving specialized fields, qualified professional institutions may be entrusted to carry out inspection and testing, financial audit, and investigation and consultation, or appraisal conclusions made by relevant institutions shall be adopted. When entrusting professional institutions to conduct inspections, it is necessary to strengthen guidance and supervision over them.

All departments of the Municipal People's Government may, in light of the actual situation, formulate detailed rules and guidelines for random inspections to clarify the procedures, items, and methods of the inspections. This facilitates practical operation by primary level law enforcement inspectors and enhances the standardization of inspection work. Efforts shall be made to explore the use of "inspection code" in random and joint inspections to enhance the fairness and impartiality of the inspections.

Funds required for engaging professional institutions in joint inspections shall be ensured by the financial departments at all levels in accordance with relevant provisions.

3. Strengthening the Release and Application of Inspection Results

Except for cases deemed unsuitable for disclosure in accordance with laws, rules and regulations, the principle that "whoever inspects shall be responsible for the input and release of the inspection results" shall be followed. Inspection results shall be made public through the Publicity System, public credit information service platforms and government websites within 20 working days from the date of formation, and subject to public supervision. For minor violations found during inspections, administrative guidance, administrative regulatory talks and corrective action may be applied to guide and encourage market participants to operate legally and compliantly. For violation that needs to be placed on file, sanctions shall be imposed according to the principle that "department that permits shall supervise it, and department that is in charge of the case shall supervise it". When constituting crimes, the case shall be promptly transferred to judicial authorities. The mutual recognition of inspection results among government departments shall be realized to promote the integration of the joint regulation featuring random selection of inspectors and inspection targets and prompt release of results with the standardization of the interim and ex-post regulation and the advancement of the social credit system.

4. Improving the Implementation Methods of Joint Inspections

Building on the comprehensive coverage of the joint regulation featuring random selection of inspectors and inspection targets and prompt release of results by relevant departments for market oversight, its normalization shall be achieved by strengthening cross-departmental comprehensive regulatory reform and improving the organization method of joint inspections and the capacity for collaborative regulation. If two or more departments conduct random inspections on the same target and the inspections can be carried out simultaneously, the joint inspections featuring random selection of inspectors and inspection targets and prompt release of results, in principle, shall be implemented. All district people's governments shall explore into models and working mechanisms for joint inspections that can be conducted routinely and are replicable in accordance with their districts' conditions. Each department shall take into account the characteristics of the tasks and the needs of regulation to formulate and refine implementation plans for joint inspection in the areas they are responsible for. This Municipality shall explore into the measures for implementation for joint inspections, to standardize the procedures for the joint regulation featuring random selection of inspectors and inspection targets and prompt release of results, including the inspection process, inspection methods, release of results, management of inspection and enforcement personnel, and the determination and application of inspection results, and accelerate the improvement of routine supervision systems focused on random inspections.

III. Establishing and Improving the Accountability Mechanism

The principle of "exonerating those who perform their duties, and holding accountable those who fail to perform their duties" shall be adhered to in the joint regulation featuring random selection of inspectors and inspection targets and prompt release of results. Work attitude, work methods and objective conditions shall be taken into account in the assessment of inspectors. This approach ensures accountability while effectively protecting the enthusiasm of primary-level law enforcement inspectors to take initiative. Those who are dedicated to their duties and fulfill their responsibilities shall be praised and encouraged. Those who fail to perform, improperly perform, or unlawfully perform their duties shall be sanctioned in accordance with laws, rules and regulations. When constituting crimes, the cases shall be transferred to judicial authorities for handling in accordance with law.

Departments at all levels and their law enforcement inspectors shall bear administrative responsibility under any of the following circumstances: failing to conduct random inspection as required and thus leading to adverse outcomes; failing to disclose the results of random inspection in a timely and lawful manner and thus leading to adverse outcomes; failing to transfer cases that possibly constitute crimes during random inspection to judicial authorities; failing to execute or delaying the execution of random inspection; or any other situations where responsibility shall be pursued in accordance with law, rules or regulations.

In the event of any of the following circumstances during random inspection, administrative responsibility may be exempted: random inspection duties have been fulfilled in accordance with laws, rules and regulations, and the arrangement of the inspection plan; problems fail to be discovered by existing technical means or regulatory conditions; incidents that do not have a causal relationship with random inspection conducted by law enforcement inspectors occur to the inspection target; errors in judgment or processing are caused by false reports issued by professional institutions entrusted for inspection; or any other situations where responsibility shall not be pursued in accordance with law, rules and regulations.

Such departments in the market oversight as market regulation, development and reform, commerce, education, public security, human resources and social security, ecology and environment, housing and urban-rural development administration, transportation, agriculture and rural affairs, water affairs, culture and tourism, health, emergency management, tax service, statistics, landscaping and city appearance, intellectual property, fire and rescue, and customs, shall fulfill their respective departmental responsibilities, strengthen coordination and cooperation, hold meetings on a regular or irregular basis to jointly address major and difficult issues, organize work assessments and evaluations, formulate relevant work systems for the interdepartmental joint regulation featuring random selection of inspectors and inspection targets and prompt release of results in market oversight, and organize unified joint inspection on the municipal scale as needed.

All districts and all departments shall fully implement the decisions and plans of the CPC Central Committee and the State Council from the perspective of adapting to the construction of a modern economic system, promoting high-quality economic development, and advancing the modernization of the national governance system and governance capabilities. They shall fully recognize the significant importance of fully implementing the regulation featuring random selection of inspectors and inspection targets and prompt release of results, further transform regulatory concepts, innovate regulatory methods, take effective measures, strengthen organizational leadership, enhance regulatory law enforcement training and team building, integrate regulatory forces to form a scientific and standardized, fair and just, open and transparent regulatory mechanism featuring random selection of inspectors and inspection targets and prompt release of results and foster a market-oriented, law-based, and internationalized business environment.

These Implementation Opinions shall be effective as of July 1, 2024.

Shanghai Municipal People's Government

April 29, 2024