China business measures since 2005 ‘remarkable’

By Wang Yanlin | October 30, 2013, Wednesday |

Print Edition

China is among the world’s top 20 economies in the world in taking efforts to improve its business regulations since 2005, a World Bank Group report said yesterday.

China has implemented 18 regulatory reforms since 2005 which made it easier for local entrepreneurs to do business, according to the report.

The reforms have helped China to narrow the gap with global good practices.

It improved the most in East Asia and the Pacific, the report said, adding China was among the 20 economies worldwide to make the greatest progress during that period.

“China’s achievements since 2005 are remarkable,” said Rita Ramalho, the report’s lead author. “They show the government’s strong commitment to creating a better business regulatory environment for Chinese entrepreneurs.”

China’s economic growth leapfrogged in the past decade with deepening reforms and opening up to the world’s businesses. It replaced Japan as the world’s second-largest economy in 2011.

In the year until June 2013, China reformed in two major areas of obtaining credit and enforcing contracts.

It implemented a regulation that guarantees borrowers’ right to inspect their own credit data, and it amended the civil procedure code to streamline and speed up court proceedings, making it faster to enforce contracts through the courts.

The report analyzes regulations that apply to an economy’s businesses during their life cycle, including start-up and operations, trading across borders, paying taxes and resolving insolvency.

The rankings are based on 10 indicators and cover 189 economies. Globally, the report said governments around the world significantly stepped up their pace of improving business regulations in 114 economies last year, an 18 percent jump from the previous year. It laid the groundwork for local entrepreneurs to expand their work.

Last year, a total of 238 business regulatory reforms were documented, the report said.

“The pace of business regulatory reform continues to accelerate following the financial crisis of 2008-2009,” the report said, noting entrepreneurs around the world would spend 45 million fewer days each year to fulfill bureaucratic requirements of starting a business compared with five years ago.

However, China’s mainland ranked way below on the list of the world’s best places to run a business while Singapore and Hong Kong topped the survey for the eighth straight year, with New Zealand, the United States and Denmark rounding out the top five, as a year ago.

The lower ranks of the list was populated with African countries like Chad, the Central African Republic and Libya.

But a rising African country, Rwanda, took honors as the most improved since 2005, praised for its efforts to boost property registration and for simplifying trading and tax procedures.

Chinese mainland fell five notches this year to 96th place and was leapfrogged by Russia.

The rankings focus on what a small or medium-sized business faces at home, as opposed to how a multinational giant would fare in the same environment.

The economies are scored on a range of issues, from how many days and procedures it takes to start a business, to the length of time to get a power hookup, to the ease of credit and the cost of exporting or importing a container.

But some people criticized the study’s methodology, pointing out hard-to-justify conclusions. For instance, in how hard it is for a company to get an electricity hookup. Haiti, one of the poorest countries in the world, ranks 67, while energy-rich Canada ranks 145. And under “protection for investors,” underdeveloped Sierra Leone ranks 22, while Switzerland is at 170.

“It is an extremely low-quality report,” one World Bank source told AFP. “They rank things that have nothing to do with each other. It’s no longer economics.”

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