China seeks to optimize business environment
A bird’s eye view of Shanghai, the gateway for businesses into China’s market Photo: IHA.FR
China’s regulation on optimizing the business environment took effect on Jan. 1, 2020. As China’s first administrative regulation on the business environment, it focuses on solving the “soft environment” problem in order to optimize the system and mechanism of the business environment.
According to the World Bank Group’s Doing Business reports, China’s business environment ranking jumped from 96th in the world in 2013 to 31st in 2019, ranking among the world’s top 10 most improved economies for ease of doing business for the second year in a row.
However, due to the late start of China’s measures to optimize its business environment, the country’s business environment still has gaps with developed countries in various aspects.
According to the Blue Book of Cities in China: Annual Report on Urban Development of China No. 12 launched by the Institute for Urban and Environmental Studies at the Chinese Academy of Social Sciences in 2019, problems in the business environment in China include the following: The boundary between the government and the market has yet to be clarified, and the government’s public service capacity needs to be improved; the market has high entry barriers and complicated procedures for approval and management, which affects the enthusiasm of an enterprise’s investment, construction and overall entrepreneurship; and the business law system is not complete with a relatively low level of law enforcement.
Scholars generally believe that to solve the difficulties in the current reform process, it is necessary to make China’s business environment increasingly market-based and law-based with a greater level of facilitation. When making it more market-based, it is necessary to focus on the development of social forces. Information technology should be utilized to realize greater business facilitation. In the legal field, it is necessary to amend and revise the regulations and provisions that are inconsistent with the spirit of the regulation on optimizing the business environment, laying a solid foundation for developing the business environment.
Guo Yi, a professor from the School of Economics at Beijing Technology and Business University, said that optimizing the business environment is a systematic project, and the main market players are on the receiving end of such reform. Therefore, in addition to government reforms, the extensive participation and supervision of various market players is required, including different types of enterprises, social organizations, media and communities. Meanwhile, the government must establish and improve an equal mechanism for communication with such market players as enterprises, timely understand and respond to the wishes and needs of each market entity, and build itself into a service-oriented government to solve problems for market entities.
The effectiveness of the reforms should be based on the personal experience of market players, said Xu Zhiduan, executive director of the China Business Environment Research Center at Xiamen University. As such, the government should focus on the concerns of enterprises when formulating policies and continue to pay attention to the actual benefits of enterprises after implementing the policies. This requires many field investigations.
It is necessary to introduce an objective and impartial third-party consulting agency to constantly conduct investigations to show the true situation and needs of market entities to the corresponding government departments, Xu continued. Moreover, the third-party evaluation agency also needs to conduct an evaluation of the reform of the government institutions in terms of streamlining administration, delegating powers and optimizing services; publicize the evaluation results; and incorporate these results into the evaluation system of government departments.
Among the market players, industry associations should also play their due role and become a bridge for effective communication between government and enterprises, suggested Liu Xiangdong, a research fellow from the Economic Research Department at the China Center for International Economic Exchanges. It is necessary to ensure that third-party organizations are impartial and fair, and that they can take into account the interests of the industry as a whole with a focus on enterprises of all types of ownership and sizes.
In the past, supervision by multiple government departments not only caused low administrative efficiency of government departments, but also wasted a lot of public resources. In this regard, scholars believe that it is necessary to make full use of emerging information technologies such as big data and blockchain to effectively improve administrative efficiency.
Guo said that government departments should generally apply information technology and build a comprehensive and systematic big data review and approval platform to share data among different departments and between the central and local governments, thoroughly solving the problems of repeated work and tedious processes.
edited by JIANG HONG