China's business environment on the right track for improvement

China Plus Published: 2018-11-06 20:51:26
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Note: The following is an edited translation of a commentary from the Chinese-language "Commentaries on International Affairs."

China has handed in a remarkable performance record by making a big leap forward on a flagship World Bank report which monitors the ease of doing business in different countries and regions.

Skyscraper in Chaoyang district, Beijing CBD, China. [Photo: VCG]

Skyscrapers in Chaoyang district, Beijing CBD, China. [Photo: VCG]

In the World Bank's Doing Business 2019 report, China overtook 32 economies to rank 46th among the 190 countries and regions surveyed, achieving the biggest stride among the top 10 improvers.

The World Bank's findings are based on surveys conducted in Shanghai and Beijing. Indicators include variables such as ease of starting a business, trading across borders, getting electricity and paying taxes, which are crucial for the survival and development of private small and medium-sized companies. The survey has also included questions on whether an economy is reforming, and how effective those measures have been over the past year.

The improvement made by China reflects the strategic move within China's economy towards more high-quality development and the gradual implementation of reform measures. It also shows China's remarkable achievements in developing the real economy, streamlining administration and delegating power, optimizing the approval system and reducing market thresholds.

Rita Ramalho, Senior Manager of the World Bank's Global Indicators Group, which produces the report, points out that "China did seven reforms which was a record number of reforms, and that's what led to such a large improvement in the ranking, which was the biggest improvement that China has ever experienced in the 16 years that Doing Business exists."

The surveys show China has made remarkable progress in the following areas: Starting a Business has been made easier through the introduction of online registration systems and simplifying social security registration. It now takes 9 days on average to start a business in China, which is on par with most OECD high income countries. In addition, Beijing is now one of only two cities in the world where the process of starting a business is completely free. China is now ranked 28th in starting a business. 

Besides, getting electricity has been made easier by the expansion of network capacity, as well as making the connection process free of charge. The introduction of a new mobile application for customers has also reduced the time it takes for businesses to obtain an electricity connection to 34 days, down significantly from 143 days. Japan and the United Arab Emirates are the only two other countries to share this distinction.

According to the report, China also remains one of the best economies to resolve a commercial dispute. It takes an average of 496 days and costs 16 percent of the value of the claim. This is far better than the OECD high income average of 582 days and 21 percent.  

Analysts have pointed out that the World Bank's indicators are unfavorable to big economies, with the suggestion that "big ships have difficulties making U-turns." Observers also note it can be a long march for any reform measures to be drafted and implemented. For this reason, China's improvement on the World Bank's doing business rankings are considered both solid and commendable.

Despite the achievements, there are still a lot of difficulties for China to overcome with respect to its business environment. Since the beginning of the year, Chinese President Xi Jinping has repeatedly emphasized that more should be done to improve it. At the first China International Import Expo, which opened on Monday, Xi Jinping made "building a world-class business environment" an important goal of China's further opening up, not only re-assuring the participants that China will respect the international business environment, but also emphasizing the need to protect the legitimate rights and interests of foreign businesses, particularly their intellectual property rights, as well as improve the quality and efficiency of intellectual property reviews, introduce a new punitive damages system and significantly increase fines for illegal activities.  

With the recent introduction of new policies and measures to support the development of China's private economy by the government, especially the full implementation of institutional reforms by early next year, a more open, innovative and inclusive business environment is expected to help China achieve further opening-up to the rest of the world.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.