News

October 29, 2019

Shanghai pledges to make doing business easier

Shanghai, which has improved the business environment substantially over the years, plans to make it further easier to do business in the city.

The city, with a 55 percent weighting in the accessment for China in the World Bank’s Ease of Doing Business 2020 report, has hugely contributed to China's business development.
Of the 10 indicators assessed by the bank, eight of them ranked in the top 60 globally and five in the top 30, said Chen Yin, executive vice mayor of Shanghai. "This indicates that the business environment reform in Shanghai has made great progress in both depth and effectiveness."
The biggest improvement was in dealing with construction permits. Shanghai advanced sharply by 88 places to the 33rd, with a full score of 15 on the building quality control index, after the city launched an integrated service system for the joint examination and approval of construction projects, as well as an offline examination and approval center to deal with the applications.
The city also jumped 36 places to stand at 28 globally for "protecting minority investors" indicator, up one place to 27 for "starting a business," up two spots to 12 for "getting electricity," and improved by a spot to fifth in "enforcing contracts."
The five licenses previously required to start and operate a new business — the business license, the organization code certification, the tax registration, the statistics registration and the social welfare insurance registration — have been combined into one license.
It also climbed up nine places to 56 in trading across border, and up 10 places to rank 51 in resolving insolvency, according to the bank's report. The city also went up nine places to rank 105 for paying taxes. The time needed for businesses in Shanghai to prepare, file and pay taxes has been reduced to just 138 hours per year on average, and companies only need to make seven payments.
For example, it took barely 10 months for the Tesla Shanghai Gigafactory to start trial production since it broke ground. The company also said the facility was about 65 percent cheaper to build than its Model 3 production plant in the United States.
The two indicators for registering property and for getting credit, however, fell one and seven places, respectively, to stand at 28 and 80 globally.
Some of the reforms in Shanghai were launched late and had not accumulated sufficient cases, while some other reforms undertaken had not been publicized and therefore were not known to the professional institutions involved in the bank's assessment work, said Zhu Min, deputy director of the city's development and reform commission while explaining the reasons why some aspects had drawn a negative mark on the bank's assessment of the city.
"A good business environment is productivity," Chen pointed out. "After two rounds of reform in the business environment, we realized that improving some 'soft' environments such as optimizing systems can be more effective in attracting investment and promoting employment, and our efforts to constantly improve the business environment have a positive effect on economic development."
Faced with the complicated international situation and the downward pressure on the economy, the continuous optimization of the business environment has boosted the confidence of enterprises in investing in the city, Chen said.
In the first three quarters of this year, Shanghai's economy maintained stable growth, with the city's gross domestic product rising by 6 percent, showing an upward trend from quarter to quarter. Industrial investment grew by 16.3 percent in the first three quarters, extending last year's 17.7 percent rise to post double-digit growth for 18 consecutive months, setting the stage for further economic growth in the future.
He also highlighted the progress made in the China (Shanghai) Pilot Free Trade Zone. Over the past six years, the Shanghai FTZ has explored and developed more than 300 replicable experiences in the areas of investment, trade, finance, regulation in the course and afterward, and the reforms on separating permits from business licenses, Zhu said.
"Shanghai will focus on expanding the benefits for enterprises, study and formulate the business environment improvement in its 3.0 plan, and continue to make greater efforts to enhance the business environment," he said.