Optimizing the Business Environment and Further Enhancing the Power of Economic Development in China | Economic Development | Doing Business

Continuously deepening reforms and optimizing the business environment are important measures for China to further enhance its economic growth momentum. The business environment directly affects the growth, innovation, and development of every business entity, affecting the vitality and growth momentum of all business entities, and is an important aspect of the comprehensive competitiveness of a country or region. Especially after entering a new stage of development, China's economic development is facing various constraints such as a shrinking space for industrial scale growth and limited growth in factors such as land and labor. Further improving institutional mechanisms and unleashing institutional supply dividends have become important driving forces for high-quality development, while optimizing the business environment is a key link in building a high-level socialist market economy system and a concentrated manifestation of institutional supply. The report of the 20th National Congress of the Communist Party of China put forward the goal of "creating a market-oriented, legal, and internationalized first-class business environment", and proposed the main direction of "improving the basic system of market economy such as property rights protection, market access, fair competition, and social credit, and optimizing the business environment", which is the guiding principle for optimizing the business environment in China's new development stage.

Since the 18th National Congress of the Communist Party of China, China has attached great importance to optimizing the business environment, which has been continuously improving. The global ranking has increased from 91st in 2012 to 31st in 2020. In 2019, the State Council issued the "Regulations on Optimizing the Business Environment", marking a new stage of legalization in optimizing the business environment in China. In 2022, the State Council issued the "14th Five Year Plan for Modernization of Market Regulation"; In the same year, the Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a National Unified Market were released, providing longer-term and higher-level planning and guidance for optimizing the business environment. On this basis, optimizing the business environment in the new development stage needs to focus on promoting Chinese path to modernization, further complement the weak points and create institutional advantages. On the supply side, optimize the business environment around the requirements of promoting changes in the quality, efficiency, and driving force of economic development; On the demand side, optimize the business environment around the requirements of building a new development pattern and expanding domestic demand strategy. Specifically, we should focus on four areas for continuous optimization and improvement.

One is to comprehensively optimize the business environment that is conducive to the construction of a high-quality country, and promote the transformation of economic development quality. China has basically achieved industrialization, promoting changes in the quality, efficiency, and driving force of economic development, accelerating the construction of a strong manufacturing and quality country, and promoting China's products to move towards the mid to high end are important directions and growth points in the new stage of economic development. In 2023, the Central Committee of the Communist Party of China and the State Council issued the Outline of Building a Quality Strong Country, which made unified arrangements for the construction of a quality strong country. The construction of a strong quality country is not only about the development of industries and enterprises, but also requires support from a business environment that is conducive to quality improvement. Only by establishing such a business environment and allowing consumers to access product quality information can high-quality products be more easily recognized by consumers, achieving high quality and competitive prices, and better utilizing market forces to guide enterprises to achieve quality upgrades.

From the perspective of the business environment, the first step is to strengthen the system of product quality supervision and spot checks, and quickly achieve integrated spot checks of production circulation, online and offline. Key products will be subject to nationwide enterprise spot checks for full coverage, supporting the full development of market-oriented and socialized inspection and testing institutions and strengthening supervision of these institutions. Give full play to the advantages of e-commerce platforms, establish a genuine consumer evaluation system, and timely collect consumer evaluation information on product quality. Publicly, fairly, and efficiently disclose the results of product quality testing, using digital means such as QR codes to increase more disclosure channels, allowing consumers or users to obtain product quality information intuitively and conveniently. In the past, some places in China were concerned about the impact on corporate image and local economic development when quality issues were discovered, and were unwilling to disclose inspection results, which greatly reduced the effectiveness of inspection and testing. Only through comprehensive, open, fair, and efficient information disclosure can counterfeit and shoddy enterprises be deterred, low-quality enterprises be under pressure, and high-quality enterprises be driven by demand.

The second is to strengthen the construction of the social credit system with the governance of overdue accounts as the core, and to help improve the efficiency of economic development. The credit system is a fundamental element of the business environment, involving various fields and aspects of business activities. A sound social credit system is an important guarantee for reducing transaction costs and enhancing economic vitality, as well as an important way to promote efficiency transformation. China attaches great importance to the construction of the credit system. The "Regulations on Optimizing the Business Environment" require the country to strengthen the construction of the social credit system, continuously promote the construction of government integrity, business integrity, social integrity, and judicial credibility, and improve the overall awareness and level of integrity in society; The Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Construction of a National Unified Market require the establishment of a unified social credit system, as well as the improvement of mechanisms for incentivizing and punishing dishonesty; The 14th Five Year Plan for Modernization of Market Regulation proposes to improve the information collection and disclosure mechanism, strengthen cross regional, cross departmental, and cross level information collection and sharing, improve credit constraint and incentive mechanisms, improve credit risk classification management mechanisms, and establish a long-term mechanism for credit supervision.

In recent years, China has made significant progress in many areas such as the construction of credit reporting systems. However, there are many weak links in other aspects, especially in the timely payment of accounts and contract performance, which have become important obstacles affecting enterprise operations. The Regulations on Optimizing the Business Environment stipulate the establishment of a long-term mechanism for preventing and controlling the arrears of accounts owed by state organs and public institutions to business entities, and also requires large enterprises not to use their advantageous position to owe accounts to small and medium-sized enterprises. However, overall, there are not many institutional and institutional measures to solve the problem of overdue payments between enterprises, and this issue has not yet been regarded as an important aspect of enterprise credit. It is necessary to further focus on solving the problem of overdue payments between enterprises on the basis of solving the arrears of government agencies and public institutions to the operating entities. When the time is ripe, overdue payments should be regarded as an important aspect of enterprise credit. This is also an important part of expanding institutional openness, enabling better connectivity between domestic and international markets, and building an international first-class business environment.

The third is to further strengthen the business environment that is conducive to innovative development and promote the transformation of economic development momentum. Adhering to innovation as the primary driving force and implementing the innovation driven development strategy in depth is not only an inevitable requirement for building a strong country in science and technology, but also a fundamental guarantee for shaping new development drivers and promoting economic transformation in the new stage of development in China. China has always attached great importance to and continuously improved the institutional mechanisms for promoting innovation. The Regulations on Optimizing the Business Environment require an increase in the protection of intellectual property rights; The 14th Five Year Plan for Modernization of Market Regulation proposes to build a comprehensive pattern of intellectual property protection, improve the innovation service system of enterprises, optimize regulatory mechanisms that adapt to the development of the new economy, and enhance the innovation momentum of business entities. Currently, accelerating the improvement of institutional mechanisms to promote innovation remains a key and difficult point in optimizing the business environment.

The comprehensive establishment and implementation of a punitive compensation system for intellectual property infringement is a key link in further implementing intellectual property protection. Innovation is inherently a high investment and high-risk activity, and there is great uncertainty in whether innovation can succeed. If the results of innovation cannot be well protected, and if they are not adequately compensated for counterfeiting or infringement, it will greatly undermine the enthusiasm of enterprises for innovation. In practical situations, many enterprises often face difficulties in providing evidence and insufficient compensation for infringement damages in intellectual property protection. The phenomenon of low infringement costs and high rights protection costs is still very prominent. Only by truly implementing the punitive compensation system and ensuring that infringement is not worth the loss, can we effectively combat illegal behavior, protect and stimulate the innovation enthusiasm of enterprises. Creating a business environment conducive to innovative development also requires strengthening the protection of enterprise trade secrets. In the process of development, some enterprises adopt methods such as "poaching people" from competitors to acquire technology, and some employees who have mastered the technology leave to establish similar enterprises. These also damage the rights and interests of the enterprise and affect innovation enthusiasm. Therefore, strengthening the protection of enterprise trade secrets is also a key link in optimizing the business environment.

The fourth is to focus on protecting consumer rights and shaping a business environment that is more conducive to expanding domestic demand strategy. Accelerating the construction of a new development pattern with domestic circulation as the main body and domestic and international dual circulation promoting each other is an important strategic direction for high-quality development in the new development stage. The main contradiction in promoting the domestic circulation at present is insufficient domestic demand, especially the slow growth of household consumption. We will coordinate the expansion of domestic demand and deepen supply side structural reform, forming a higher-level dynamic balance of demand driving supply and supply creating demand, and achieving a virtuous cycle of the national economy. In 2022, the Central Committee of the Communist Party of China and the State Council issued the "Outline of the Strategic Plan for Expanding Domestic Demand", which pointed out that in the future, the domestic market will become more dominant in the national economic cycle, and consumption has become the main driving force of China's economic growth.

Optimizing a business environment that is conducive to enhancing consumer rights protection is an important guarantee for promoting consumption growth. Consumer growth fundamentally depends on income growth, but it is also closely related to the consumption environment. Only a good consumption environment that allows consumers to "buy with peace of mind" can alleviate their worries, encourage and encourage consumption, and increase domestic and domestic consumption. The "14th Five Year Plan for Modernization of Market Regulation" has made special arrangements for this, and it needs to be seriously deepened and implemented. For example, in response to the issue that post consumer evaluations on many e-commerce platforms may not be truthful and reliable, this plan proposes to "establish and improve a post consumer evaluation system to reduce information asymmetry in the consumption field"; In response to the problem of difficult returns in offline shopping, this plan proposes to vigorously carry out activities to create trustworthy consumption, encourage the implementation of no reason returns in offline shopping, and explore the implementation of return and exchange systems in different locations and stores. By accelerating the implementation of these requirements, China's level of consumer rights protection will reach a new level, which can quickly form a situation where consumers can buy domestic products with confidence, eat with peace of mind, and use with ease. This will play an important role in promoting the expansion of domestic demand.