Editor’s Note: The use of guidance documents as backdoor regulations is a long standing concern of business communities around the world. See also, for example, SEC Guidance on Social Media and Business Disclosures Stirs Controversy (2013), The Fragile State of the Term “Guidance” (Regulatory Pacesetters 2017), Regulatory Guidance Processes: Selected Departments Could Strengthen Internal Control and Dissemination Practices (GAO 2015), and OMB To Give Agencies New Guidelines for Guidance Docs (Bloomberg (2018).
From: The Regulatory Review
China’s State Council imposes new requirements to curb the abusive aspects of regulatory guidance documents.
As the Trump Administration seeks to pare back agency regulations, the Xi Administration in China is clamping down on guidance-type regulatory documents, frequently called “red-headed” documents due to the official letterhead on which they are issued.
The U.S. business community in China has long complained about these directives, conservatively estimated to number in the millions, and their inconsistent enforcement. Even though red-headed documents frequently impact the public’s rights and obligations, they have not been required to go through the increasingly transparent rulemaking procedures that apply to legally binding regulations and rules adopted at all levels of the Chinese government.