China Does Remarkably Well in Improving Business Environment

The World Bank report “China’s Doing Business Success: Drivers of Reform and Opportunities for the Future,” released in late July, shows that China has achieved a remarkable improvement in its business environment in recent years.

Measured by the World Bank’s global Doing Business report, China has moved up by almost 50 places over the past two years, from 78th place in the 2018 report to the 31st now. China was among the countries showing the most notable improvement rate and is among the top 10 fastest global performers for two consecutive years.

The World Bank attributes China’s success to six key drivers – high-level leadership and ownership of the reform agenda, local policy experimentation, national and international knowledge sharing, strong enforcement of the reform agenda and accountability for the results, robust private sector participation, and intensive use of e-government services.

Remarkable progress has been achieved during the past few years. There is one important contributing factor now widely recognized – the strong leadership developing and supporting the reform agenda at both the central and local government level.

This is not easy to be replicated elsewhere. China’s Foreign Investment Law has been in effect since last January to provide stronger protection and a better business environment for overseas investors. To this is added the Regulations on Optimizing the Business Environment in a bid to explore institutional improvement to back the business community in general.

Although the direction of overall reform is set by China’s national leaders, local governments are encouraged to undertake tailored and localized business reforms and pioneer policies. Beijing is one of the cities that are taking the lead in this regard.

Beijing has successively implemented versions 1.0, 2.0, and 3.0 of the “9+N” series of policies, which have significantly improved the business environment.

Shanghai, another successful city in terms of business upgrade, designated 2018 as the “Year of Business Environment Reform.” Having learned a lot from the effective governance concepts and practices internationally, it launched special action plans for benchmark reforms of version 1.0, 2.0, and 3.0 between 2018 and 2020.

China’s success has also been driven by an intensive use of digital technology such as big data, blockchain and cloud computing in e-government services. Beijing and Shanghai leveraged China’s well-developed digital economy to put government services online.

Shanghai has established China’s first “one network to run” general portal, setting an example for reforms across the country. This integrates city-wide inter-agency government services through blockchain, big data and other digital technologies, greatly improving administrative efficiency and improving Shanghai’s business convenience.

Recently it took the lead in the country to realize the simultaneous issuance of electronic business licenses and electronic seals.

There are also a number of systemic reform initiatives. One of them is “Fang Guan Fu” (reforms to streamline administration and delegate power, improve regulation, and upgrade services). The “Fang Guan Fu” reform initiatives, as key measures to transform government functions, improve business environment and revitalize market activities, focus on redefining the relationship between government and market through delegation of power, streamlining administrative procedures, and improving regulations and public services.

The “Fang Guan Fu” reform initiatives emphasize the combination of reforms in these three aspects to remove institutional barriers for a better business environment and sustainable economic development.

Economic conditions in China have changed dramatically over the past seven months. The COVID-19 pandemic and measures taken to contain it administered a severe demand and supply shock.

Since early this year, local governments at different levels have put forward policies as hedges against uncertainty with the optimization of business environment, helping companies to tide over difficulties.

On this basis, the General Office of the State Council issued the Implementation Opinions on Further Optimizing Business Environment and Better Serving Market Entities to institutionalize and standardize the typical experiences emerging in various regions, and promote the efficiency of resource allocation and product services through institutional reforms.

Amid the COVID-19 pandemic and a complex international situation, market players have been under great pressure to survive. As the Chinese economy faces new risks and increasing downward pressure, continuous optimization of business environment has become an important means to boost market confidence, promote economic recovery, and promote the transformation of the economy towards sustainable and high-quality development.

China is ahead of the global curve when it comes to economic recovery after months of lockdown, drawing on the fruits of years of continuous improvement of business environment.

He Shuquan is a professor at the School of Economics, Shanghai University.