Capital hurdles removed as race for investment hits fast track

The business environment will be boosted by lowering the market-access threshold for private and foreign capital, and reducing the burdens on enterprises facing challenges arising from the changing external situation.

A State Council executive meeting, presided over by Premier Li Keqiang on Oct 22, approved five measures and urged the full carrying out of all favorable policies to ease difficulties for enterprises and increase their confidence and competitiveness, a statement released after the meeting said.

The country will further reduce policy barriers to private capital market access and fully carry out an updated version of the market access negative list, which will be completed by the end of this year, to make all non-forbidden areas accessible to private and overseas businesses, the statement said.

By the end of March next year, all barriers restraining foreign investors that are not on the negative list will be removed to ensure the same standards for domestic and overseas companies.

The meeting was the State Council's fifth this year on improving the business environment. It was also one of the latest occasions that China has reiterated the need to provide a better environment for investors and market entities, cut costs for market operations and promote a stable, fair and transparent business environment.

The business environment has become a constraint on regional economic growth, with developed regions such as Zhejiang and Guangdong provinces having a better such environment, said Zhu Lijia, a professor at the Chinese Academy of Governance. A high-quality business environment can boost productivity, he said.

Quan Heng, a researcher at the Shanghai Academy of Social Sciences, said optimization of the business environment played a vital role in transforming governmental functions. The government's focus has shifted from providing favorable policies to making a business environment built on fair competition, and investment and talent can be attracted when the environment gets better, he said.

This year marks the 40th anniversary of China's reform and opening-up policy. China’s ranking in the Doing Business 2017 Global Report, released by the World Bank, went up 18 places. China also had higher scores in economic performance, governmental efficiency and business efficiency in the 2017 Global Competitiveness Report released by the Business School Lausanne in Switzerland.

An increasing number of market entities are being registered under an improved business environment. According to the State Administration for Market Regulation, each day in the first nine months saw 18,400 new enterprises registered. Meanwhile, several foreign-invested projects will be established in China, including German chemical giant BASF's sole venture in Guangdong province at a cost of 10 billion euros ($11.4 billion).

At the meeting, Premier Li called for the fostering of a market-driven and law-based business environment that is in line with international standards. He said the international community takes business-environment improvement as a vital indicator when considering cooperation with China.

The market access negative list and the negative list for foreign investors have been introduced and carried out, but some other barriers and restrictions still remain, said Cui Fan, a professor of international trade at the University of International Business and Economics.

Cui, also deputy secretary-general of the China Society for World Trade Organization Studies, said removing market access barriers takes a long time and requires concrete efforts before ultimately making a fair competitive playing field for State-owned, private and foreign capital.

The new moves will promote reforms for domestic private enterprises and the further opening up to foreign companies, Cui said, adding that they will also be beneficial for attracting foreign investments amid challenges such as trade friction and downward pressure on economic growth.

In addition, the executive meeting also urged tax reductions, lower fees for enterprises and their social security contributions. More concrete measures will be deliberated and promulgated. Administrative approvals will be further cut and all such approvals not included in a new list modified by the end of next March will not be allowed.