Over the last few years, the business environment in China has significantly improved due to a number of new regulations and governmental initiatives. On October 24, 2019, the World Bank published its Doing Business study 2020, including an Ease of Doing Business Ranking comparing 190 economies around the world.
Have you read our previous article? China’s New Regulation to Improve the Business Environment
This year, China ranked 31st according to the World Bank’s report. Keep reading to learn more about the ranking and China’s major improvements.
What is the Ease in Doing Business Ranking?
Doing business 2020 is the World Bank’s most recent study (17th issue) measuring the ease of doing business in 190 countries. 12 measures are covered by this report, 10 of which are used in the Ease of Doing Business Ranking:
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
However, the parameters for China have been made solely on the basis of the business environment in Beijing and Shanghai. Smaller Chinese cities have not been taken into consideration. Therefore, the scope of the findings is still limited.
What has improved in China?
Over the past few years, China has improved its ranking incredibly fast. Between 2017 and 2018, China already jumped from 78th to 46th position. Now, China ranked 31st in 2019 with an overall score of 77.9.
The World Bank also counted China among the top 10 best improvers this year for the second time in a row. With new reforms in 8 areas, China has even outperformed itself in 2019 compared to last year (7 areas).
According to the report, the biggest improvements in China involve the following fields:
Dealing with construction permits
Firstly, Beijing and Shanghai lowered the requirements to get a construction permit for construction projects of low risk, and speeded up the process of getting water and drainage connections. In addition, China also implemented measures to make construction safer.
Source: World Bank. 2020. Doing Business 2020. Washington, DC: World Bank. License: Creative Commons Attribution CC BY 3.0 IGO
Getting electricity
The application process for electricity has been streamlined in Beijing and Shanghai. Moreover, electricity tariff changes have become more transparent.
Paying taxes
The report praised China’s tax reforms and the good results they achieved since their implementation. Tax preparation, filing and paying, for example, have become much easier and faster. For instance, in 2006, companies were required to do 37 tax payments, which took on average 832 hours a year. Now, only 7 payments are required, and a company only spends 138 hours per year on that matter.
In 2014, China also started digitalizing its tax system by making taxpayer services accessible on official WeChat and Weibo accounts. Especially since the Golden Tax III system, introduced in 2017, the Chinese government took measures to facilitate e-filing, e-invoicing, VAT declarations, and much more.
Resolving insolvency
This area has been improved by the introduction of new rules for post commencement credit priority and by involving creditors even more in insolvency procedures.
Other areas
China also performed well with a series of reforms in the categories “Starting a business”, “Protecting minority investors”, “Trading across borders” and “Enforcing contracts”.Need advice on finding the best strategy for your company in China? Get in touch with our team for a consultation and follow us on social media to receive the latest news.
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