Highlights of the Doing Business Report 2019
China advanced to a global ranking of 46th for its business environment in 2018, up from 78th the year before, a result of implementing the largest number of reforms in the East Asia and Pacific region.
It now takes 9 days to start a business, on par with most OECD high-income countries. Beijing is now one of only two cities in the world where the process of starting a business is completely free. China is now ranked 28th on that point.
Getting an electricity connection is also entirely free in China. Japan and the United Arab Emirates are the only two other countries in the world to have this distinction. The time to obtain an electricity connection was also reduced, from 143 days to 34 days, thanks to the rollout of a new mobile application for customers.
China made paying taxes easier by abolishing the business tax, allowing for joint filing and payment of all stamp duties, and implementing several administrative reforms to lower the compliance time.
China reduced the time and cost for exporting and importing by implementing a single window, eliminating administrative charges, increasing transparency and encouraging competition.
China also remains one of the best economies in the world to resolve a commercial dispute. It takes 496 days and costs 16 percent of the value of the claim, far better than the OECD high-income average of 582 days and 21 percent.
More efforts to better the business environment
I. Ensuring level playing field
Equality is the keynote of China’s Foreign Investment Law, which is set to replace the existing three laws and serve as the basic law on foreign investment since Jan 1, 2020.
The new law introduces the system of pre-establishment of national treatment and a negative list, according to which sectors outside the list are fully open to foreign investment. What’s more, from policy supports to government procurement, and from stand-setting to fund-raising, the law makes it easier for foreign investors to compete in China on an equal footing.
In addition, the Chinese government also grants extra support for the use of land, sea, energy and planning for some major foreign investment projects in such sectors as new energy, advanced manufacturing, petrochemical engineering and electronic information.
II. Shrinking Negative List for foreign investment
When doing business in China, you must be aware of the Negative List, a list of industries or areas inaccessible or only partially open to investment. However, industries not on the list are legally available for investment from all market entities.
There are actually two negative lists, one for foreign investment applicable nationwide and the other for foreign investment in free trade zones. The negative list has continued o shrink with an increasing number of industries open to foreign investment. In June 2019, China updated the 2019 negative list for foreign investment and the 2019 negative list for foreign investment in free trade zones, with the number of items cut down to 40 and 37 respectively.
With the unified regulatory rules, many foreign investors can know which industries they can invest in and which they cannot, and are no longer subject to the willful regulatory moves of some local government agencies when doing business in China.
III. Enhancing protection of intellectual property rights (IPR)
China has so far established a comprehensive legal system governing IPR, including the Trademark Law, the Copyright Law, and the Patent Law, and has participated in almost all the major international IPR conventions.
China has refined its laws and regulations on IPR and improved its punitive damages system, greatly increasing the cost of IPR infringement. China has combined IPR protection with the building of the social credit system, with 38 ministries involved in the joint punishment of serious IPR infringements.
Besides accelerated rights authorization and confirmation, more convenient and efficient channels are being set up, allowing market entities to safeguard their rights at lower cost. China has set up 24 IPR protection centers and 20 IPR rapid reaction centers.