China advances in World Bank’s ease of business rankings after sharp increase in reforms

In light of Western criticism and the US-China trade war, Beijing has shown an ‘eagerness to reform’, World Bank says in new report
China jumps to 31st from 45th in the bank’s global ease of doing business rankings

China economy

Amanda Lee

Published: 10:00pm, 24 Oct, 2019

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In the midst of rising Western criticism and a trade war with the United States, China significantly accelerated the number of reforms it carried out this year or has planned for next, according to a World Bank report published on Thursday.

This “eagerness to reform” has seen China jump from 45th to 31st in the ease of doing business index, the World Bank said in its 2020 “Doing Business” report.

Over the past several years, China has come under increasing criticism from the US and other Western trading partners for perceived barriers to operating in the country, including complaints about restrictions on market access, an uneven playing field for foreign firms, and lack of adequate protection for intellectual property, among others.

The World Bank report suggests that China is heeding the message and starting to address foreign concerns.

Between 2016 and 2018, Beijing enacted just six reforms, including two last year, the international financial institution said.

But in this year alone, the government has implemented seven, including streamlining procedures for starting a business and registering property. Eight reforms will be enacted next year, two of which include making it easier to access to electricity and enforce contracts, the World Bank said.

The figures represent the highest number of reforms that China has made in a decade, while no law or regulation that was enacted this year or is set for next would make it harder to do business in the country, the report said.

“The Chinese government also created working groups targeting each of the ‘Doing Business’ indicators. To date, China has shown a notable improvement in the areas of dealing with construction permits, getting electricity, and resolving insolvency,” the report said.

The annual rankings are assessed on scores in 10 areas, including dealing with construction permits, access to credit, paying taxes and cross-border training, among others.

China lags behind top-ranked countries in the areas of access to credit and ease of paying taxes, with a Chinese company on average spending 138 hours per year filing seven tax payments, compared to 64 hours to file five in Singapore.

This was still an improvement from more than a decade ago, however, with the 2006 report showing businesses in Shanghai spent 832 hours per year on average to prepare, file, and pay taxes that included 37 payments.

Singapore remained second on the “Doing Business” list, behind New Zealand, while Hong Kong rose from fourth to third despite ongoing anti-government protests. The US rose two places to number six.

Bahrain planned to implement the highest number of regulatory reforms next year, with nine, while China and Saudi Arabia made eight, the report said. Jordan, Togo, Tajikistan, Pakistan, Kuwait, India and Nigeria also made notable improvement, the US-based institution said.

China’s State Council has reaffirmed its commitment to opening up its markets and improving the domestic business environment for foreign companies amid the latest trade war truce with the US.

This article appeared in the South China Morning Post print edition as: China advances in World Bank rankings for ease of doing business

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