China was among the world’s top 10 most-improved economies for ease of doing business for the second year in a row thanks to a constant and robust reform agenda, the World Bank Group’s “Doing Business 2020” study says.
China along with another nine countries implemented one-fifth of all the reforms recorded worldwide in 2018/19, the study says.
The annual study measures the regulations that enhance business activity and those that constrain it with quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies. The study analyzes regulations that encourage efficiency and support freedom to do business.
By carrying out business reforms during the 12 months to May 1 this year, China ranks 31st globally in ease-of-doing-business rankings with a score of 77.9 out of 100. It ranked 46th last year and 78th in 2017.
“China has undertaken substantial efforts to improve the domestic business climate for small and medium-size enterprises, maintaining an active pace of reforms,” said Martin Raiser, World Bank Country Director for China. “Laudable progress has been achieved on a number of ‘Doing Business’ indicators, particularly in the area of construction permitting.”
According to the study, China conducted effective reforms in eight fields to facilitate investment and business operations: starting a business, dealing with construction permits, getting electricity, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
Starting a business has become much easier now since in most cities application procedures have been so simplified that applicants can get things done through a one-stop service platform, online or offline.
For years, the government has been pushing for the improvement of the business environment through a combined policy of opening, regulation and service. As a result, the average time of obtaining a business license has been reduced from 22 days to five days nationwide now. In major cities like Beijing, Shanghai, Guangzhou and Shenzhen, journalists witnessed some applicants getting their applications processed and approved and obtaining their business certificates online or through a window in the service hall within a mere hour.
No one should be more impressed by the extraordinary efficiency of China’s business approval procedures and the speed of China’s infrastructure construction than Elon Musk, Tesla’s CEO.
In May 2018, Tesla was granted a business license with registered capital of 100 million yuan (US$14.29 million) in Pudong, Shanghai. In September, it changed its registered capital to 4.67 billion yuan. In October, it successfully purchased a piece of land measuring 864,900 square meters for the construction of its super factory to produce Tesla e-cars.
On Oct. 23, 2019, merely one year after he decided to invest in China, a beaming Musk announced that his newly completed factory had officially started production, seeing the first made-in-China Model 3 rolling off the ultra-modern assembly line.
When commenting on the pace of the completion of his Shanghai factory, Mask said that he had never seen anything faster. “China is the future,” he praised.
As a reformist pioneer, Shenzhen has also practiced more aggressive measures to facilitate business operations. Several months ago, a business license was “instantly approved” without any human interference, the first of its kind in China. With the aid of big data and AI, in March of this year Shenzhen launched the instant approval service for the registration and deregistration of individual businesses, virtually eliminating the so-called time tax.
Despite the great progress, there is yet much room for improvement. Currently, the biggest problem hindering private businesses in operation and growth is the difficulty in getting bank loans. In fact, this issue has bothered private enterprises for years. If the facilitation and liberation of the business registration process are necessities for the birth of a business, then easy access to financing is the prerequisite for the success of it. The solution calls for the joint efforts of governmental agencies, banks and businesses.
To further improve the business environment, the State Council has recently promulgated “Regulations on Optimizing the Business Environment,” which will take effect on Jan. 1.
The promulgation of the new regulations has filled this legislative gap and is a milestone of significance in the construction of the business environment, marking a new stage in China’s optimization of the business environment system.
(The author is an English tutor and freelance writer.)