What kind of leap has Shanghai made in optimizing its business environment?, Thinker | Shen Kaiyan: From 1.0 to 6.0 Environment | Socialism | Doing Business

The business environment is an important reflection of a country's institutional soft power, comprehensive competitiveness, and market operation efficiency.Since the introduction of the 1.0 version of the business environment reform in Shanghai at the end of 2017, it has been pushed to version 6.0 so far. In the view of Shen Kaiyan, the director of the Institute of Economics at the Shanghai Academy of Social Sciences, this reflects the leap of Shanghai from passive benchmarking to active leadership, and from "prescribed actions" to "autonomous actions". The following is her speech at the Shanghai Municipal Party School of the Communist Party of China.

Creating a good business environment is not only an important focus to comprehensively stimulate social creativity and market vitality, but also an era proposition to promote the new journey of Chinese path to modernization. Since the introduction of the 1.0 version of the business environment reform by Shanghai at the end of 2017, it has been pushed to version 6.0, continuously updating the reform plan with a frequency of one version per year, continuously optimizing and innovating, and strengthening system integration. From benchmarking against the World Bank evaluation system in versions 1.0 to 4.0, drawing on the experience of developed countries, to breakthroughs in key areas and key links in versions 5.0 and 6.0, Shanghai has made a leap from passive benchmarking to active leadership, from "prescribed actions" to "independent actions", actively responding to new propositions posed by new tracks, new formats, and new models on the business environment, truly achieving endless optimization of the business environment, and has always been on the road.

The necessity of continuously optimizing the business environment

Liberating and developing productive forces requires unremitting optimization of the business environment. According to research by the World Bank, the direct driving effects of improving the business environment on GDP growth rate and social investment rate are 0.3% and 0.36%, respectively. For Shanghai, which is accelerating the construction of a socialist modern international metropolis with global influence, only by comprehensively creating an internationally first-class business environment can it open up broad prospects for bravely undertaking national missions and innovating future development.

1. The meaning of dealing with the complex changing environment of the global economy

At present, the risk of uncertainty in the global economic recovery has increased, and the "discordant voices" such as unilateralism, great power hegemony and isolationism have escalated from ideological trends and frictions to more intense manifestations such as armed conflict and strategic containment, making the supply chain and value chain formed under the traditional global division of labor unsustainable. To maintain development determination amidst external uncertainties, the key is to improve the business environment to release market potential and social creativity, and inject certainty into all-round in-depth reforms and higher levels of institutional opening. In the new development pattern of linkage, realize the double leap of the external "Thucydides trap" and the internal "middle-income trap", cultivate new opportunities in the crisis, and open new games in the changing situation.

2. The meaning of building a unified national market and a modern industrial system

The 2023 "Government Work Report" proposes to accelerate the construction of a unified national market, build a high-standard market system, and create a market-oriented legal and international business environment. China's economic development in the previous stage was more dependent on exogenous drive, and it was a chaser and learner; and with the breakthrough improvement of the country's comprehensive strength and international influence, it is urgent to use the thinking of a leader to explore in its own development., Create and spread opportunities to the outside world. To this end, it is necessary to give full play to the advantages of China's ultra-large-scale market and complete industrial system. Promote the orderly flow and rational allocation of innovation elements with an efficient, fair and open modern market system, and promote orderly links and efficient and smooth flow between industries. The report of the 20th National Congress of the Communist Party of China proposed to "build a modern industrial system" and "insist on focusing on the development of the economy on the real economy". Therefore, we must do everything possible to protect, guide and cultivate the market entity, the micro-entity of the real economy, and continuously Enhance its production capacity, innovation ability, and development ability, promote the continuous emergence of new technologies, new processes, and new formats, and realize the iterative upgrading of industries and the development of strategic emerging industries.

3. The meaning of implementing the national strategy and promoting the integrated development of the Yangtze River Delta

In the past five years, Shanghai has played a leading role in promoting the integrated development of the Yangtze River Delta region. In recent years, Shanghai has gathered talents, brands, leading enterprises, channels, and platforms through the "five-type economy" of innovative economy, service-oriented economy, headquarters-based economy, open economy, and flow-based economy, and its radiation and power to the Yangtze River Delta region The influence continues to increase. In the future, the new journey of leading the Yangtze River Delta to serve the overall development of the country and participate in global cooperation and competition puts forward higher requirements for the optimization of the business environment, especially in the legal space of the international mainstream system under the leadership of the West, the definition of property rights, fair competition, service standards, Arbitration mechanisms are extremely important. Only when Shanghai takes the lead in becoming the benchmark of a high-standard market system can it provide high-quality financial services, high-end business services, and international economic and trade services for the integration of the Yangtze River Delta.

4. The meaning of Shanghai speeding up the construction of a socialist modern international metropolis with world influence

In the critical period of China's economic transformation of development mode, optimization of economic structure, and transformation of growth momentum, Shanghai has accelerated the construction of a modern socialist international metropolis with world influence, and assumed the historical mission of a pioneer and pathfinder in building a modern socialist country in an all-round way. Comprehensively improve the energy level of the "five centers", strengthen the "four major functions", build a leading area for socialist modernization in Pudong, build a Shanghai Free Trade Pilot Zone and a new Lingang area, and cultivate an international consumer center city. A series of party and state-given The functional mission continues to push Shanghai to the forefront of reform and opening up, and the optimization of the business environment is an important guarantee. Especially in the context of the epidemic and international conflicts raising the pressure on global investors, international metropolises need to reflect the systematic integration ability of "attracting, retaining, using and flowing" key international core resources, optimize the business environment in the ways, means and contents of dealing with various market entities, constantly strengthen the legal supply of market ecological construction, and give full play to the advantages of national strategic centralized traction, to create an excellent business environment that integrates the rule of law environment, government environment, governance environment and humanistic environment.

The Achievements and Characteristics of Shanghai's Business Environment Construction

The Shanghai Action Plan for Optimizing the Business Environment has been upgraded from version 1.0 to version 6.0 over the past five years, implementing over a thousand reform measures, emphasizing continuity and progressiveness, and becoming a cornerstone for stabilizing market confidence. Between 2018 and 2022, the newly established market entities steadily grew at a rate of 1233 households per day, with a growth rate 1.5 times that of the previous five years. By the end of 2022, the number of enterprises per thousand people ranked first in the country. Over the past five years, the tax burden on enterprises has been reduced by over 800 billion yuan, and the golden signboard of "one-stop service" has been established, achieving 84% of administrative procedures online. Deepen the reform of "one industry, one certificate", comprehensively promote the "separation of certificates and licenses" and the commitment system for informing certification matters, and continuously improve new regulatory models such as "double randomness and one disclosure".

The optimization of the business environment in versions 1.0 to 3.0 mainly refers to World Bank standards, focusing on the reengineering of government service processes with the goal of reducing links, time, movement, and materials. The 4.0 version integrates the past three years of reform experience, emphasizes the systematic integration of local authorities, and enhances enterprise perception through full lifecycle management services. Relying on the opportunity of Shanghai's construction of a national business environment innovation pilot, version 5.0 has carried out deeper independent exploratory innovation in key areas such as improving government efficiency and convenience, regulatory fairness and prudence, and investment environment autonomy and convenience, catering to the needs and expectations of domestic and foreign market entities, and emphasizing the connection between international common rules and deepening reforms. The 6.0 version closely follows the new evaluation system of the World Bank's business friendly environment, and continues to make efforts in system integration, full process, full chain, full lifecycle, digital empowerment, efficient and precise supervision, key regional leadership, regional integration coordination, and sound legal protection. We strive to achieve a magnificent transformation from "following" to "running parallel" and then to "leading" in the international business environment competition with four "most" - the most convenient trade and investment, the highest administrative efficiency, the most standardized government services, and the most complete legal system.

Further enhancing the deep-seated challenges of the business environment

There is no best business environment, only better. Based on the core fulcrum of satisfying service market entities and facing the core functions of world-class modern international metropolises, Shanghai needs to face the gaps and shortcomings, and create a more distinctive and high-end first-class business environment in a larger scope, deeper level, and wider field.

The factor support of market entities and the sense of cost reduction need to be improved. At present, the sinking of financial services is not enough, and the proportion of credit resources available to small and medium-sized enterprises and the real economy is relatively low. There is still room for compression in areas such as deduction of enterprise research and development expenses, preferential policies for headquarters economy and high-tech enterprises, and administrative fees. The government fund support mainly focuses on projects and hard assets, which is difficult to accurately meet the needs of innovation and entrepreneurship enterprises, small and medium-sized enterprises, and service-oriented enterprises.

The scope and intensity of market access opening need to be expanded and strengthened. Behind many service industries, there is still a phenomenon of "small doors are difficult to enter". Commercial banks face certain difficulties in obtaining new business licenses such as investment and settlement; Securities companies have lower convenience in obtaining business licenses for securities asset management, underwriting, and sponsorship; It is difficult for insurance companies to expand their business access to new types of insurance such as liability insurance and credit guarantee; The practicing lawyer industry still faces high barriers to entry and competition.

The relationship between the government and the market needs further coordination and streamlining. Especially in the field of science and technology innovation, the government's usual practice is to set up special funds on the prescribed technological path, which is equivalent to setting a framework for enterprise innovation activities. The European Union and other countries tend to entrust the choice of technological breakthrough paths to enterprises, universities, and independent laboratories. The awareness of "shop assistants" who rely on government services to provide precise assistance to enterprises needs to be strengthened. Many new technologies, equipment, and models cannot connect with the existing regulatory system, and even cannot find clear regulatory entities.

The continuity of reform and the stability and predictability of policies need to be improved. Faced with the accelerated pace of industrial and technological iteration, the temporary measures of "treating headaches and foot pain with foot care" can no longer meet practical needs. The launch of advanced and upgraded policies should focus on inheriting and amplifying the positive effects of old methods, and should not deliberately pursue the introduction of new measures for the sake of seeking novelty and change. Necessary window periods and guidance should be provided for enterprises.

The main direction for further building an international first-class business environment

Digest and absorb the advanced concepts and best practices of the World Bank's new "business friendly environment", and achieve deep surpassing on the basis of benchmarking. Deeply understanding and implementing the goal of minimizing transaction costs in a business friendly environment, providing enterprises with institutional supply and public services throughout the entire process and lifecycle from establishment to liquidation and exit. Expand the scope of work to various links and participating entities related to enterprise operation, and focus on creating and optimizing the business environment with a systematic economic ecosystem approach. Accelerate the pace of aligning with other advanced international rules such as CPTPP and DEPA, and strengthen the connection between negative lists and high-level bilateral investment agreements between the United States, the European Union, and partner countries. Of course, as the central city of the largest developing country in the world, Shanghai should dare to surpass the evaluation discourse system of the World Bank and developed countries. According to the requirements of high-quality development of Chinese path to modernization, it should work together on the administrative concept, institutional mechanism reform, and administrative legislation to form an international first-class business environment with Chinese characteristics and Shanghai characteristics.

Clarify the boundaries of government governance and create a fair, transparent, and predictable legal environment for the independent and healthy development of the market. Adhere to the construction of legal system as the core to enhance government administrative efficiency and governance supervision capacity, set legal regulations and risk control red lines for enterprise behavior, encourage enterprises to boldly innovate and explore within the red line, and minimize the interference of administrative behavior on market decision-making. Create a government regulatory atmosphere that is moderately regulated, incentivized, fault-tolerant, and inclusive, allowing various enterprises, resources, and talents to gain opportunities and motivation to create value in the market economy, which is a competitive arena of survival of the fittest and self-renewal. Build credit into another golden signboard for Shanghai's business environment, govern the city according to law and establish the city with trust, and incorporate the construction of the social credit system into the fast lane of legal promotion and digital drive. Fully leverage the role of legal and credit systems as the cornerstone for maintaining the healthy, standardized, and orderly development of the market economy.

Strengthen the diversified factor guarantee support system and effectively reduce the comprehensive cost burden of enterprise operation. Exploring innovative financial support models through the Science and Technology Innovation Board and equity trading markets, focusing on improving the credit centered financial technology ecosystem, accelerating the development of credit financing businesses for small and medium-sized enterprises such as credit guarantees, "credit+credit", and joint incentives for integrity, and encouraging foreign capital to establish science and technology venture capital and intellectual property pledge service institutions. Selecting talents with a broad mind, encouraging "offshore" talents to innovate and start businesses, continuously exploring innovative measures such as entry and exit, residence and work visas, recommending talents from key institutions, and directly applying for special talents, so as to attract talents; Improve living supporting services, enrich livable cultural ecology, and enable talents to be retained. In response to the scarcity of land and high rent in Shanghai, secondary planning will be carried out for areas, parks, and buildings with low plot ratio and utilization rate. In non city center areas, plot ratio restrictions will be appropriately relaxed based on industrial functions.

Respect and protect the right to survival and development of the private economy, and adopt the policy of "releasing water and fish" and "taking less, giving more, and releasing more". If possible, exempt, reduce, and slow down. Improve consistency in the implementation of policies, regulations, government procurement, and other policies among enterprises of different ownership systems, and implement equal and equal treatment under the same conditions. For example, in government project bidding, domestic and foreign investment, state-owned and private enterprises are treated equally, and standardized and unified administrative processes are comprehensively promoted. Increase the investment of various government funds and financial platforms in the development of private enterprises, effectively mobilize the fiscal and financial linkage mechanism to empower stable growth.

Several Thoughts on Further Optimizing the Business Environment

Finally, I would like to share some personal thoughts on further optimizing the business environment.

Firstly, the main body of optimizing the business environment is enterprises, and the construction of the business environment should be based on the first evaluation criteria of enterprise perception and satisfaction, rather than blindly pursuing indicator scores and rankings. For enterprises, key satisfaction lies in the following points:

——While the approval or handling process has been reduced, the various costs of pre preparation have truly been saved. Behind "one set of materials, one application", enterprises can receive guidance or guidance from the government on application preparation, and can obtain cost-effective professional services from market intermediaries, saving a lot of manpower, time, and capital costs, and investing in market value creation activities such as technological improvement, product research and development, and market development.

——At the same time as facilitating registration and licensing, the post admission services have become more comprehensive and comprehensive. After the first step of admission and approval, the entire lifecycle of enterprise operation cannot be separated from the supporting software and hardware services. From being allowed to operate to achieving profitability, the government needs to make good use of a package of "toolboxes" such as industrial funds, technology procurement, public platforms, park services, and factor guarantees. This puts forward new propositions for the government to restructure its power and responsibility structure, operating mechanism, and management methods.

——While the soft environment such as systems and laws continues to improve, the hard environment must also be matched and kept up. Administrative efficiency, public services, market environment, and political business relations are the concretization of the soft environment and the most emphasized content in previous business environment work. However, it should not be ignored that modern economy is the basic configuration for the integration of industry, city, and people. Hardware facilities such as residential transportation, schools, hospitals, and consumer entertainment are important factors for high-end innovative talents to vote with their feet. Therefore, the prerequisite for optimizing the business environment is to improve livability.

——While the service awareness of "shop assistants" has increased, they are also wary of "excessive care" or even "indulgence". Focusing on the demands and growth of enterprises should not evolve into frequent visits and inspections; The fault tolerance and exemption mechanism cannot evolve into giving the green light to violations and illegal activities. To implement the service concept of "responding to every request and interfering with everything", it is necessary to delineate the boundaries of government and enterprises through the rule of law, and give enterprises full survival and development rights above the legal red line.

Secondly, optimizing the business environment is closely related to the construction of the rule of law, and the rule of law itself is the best business environment. The new and old versions of the World Bank's indicator system not only measure processes, processes, or time, but also evaluate whether a country's legal environment can standardize and standardize a series of external conditions that enterprises cannot control themselves, thereby reducing the negative impact of external uncertainty risks on enterprise operations. Any simplistic understanding of the business environment as "time saving and simplification" may lead practical work into utilitarian traps, resulting in a distorted trend of indicators and ranking "championships". Therefore, it is necessary to have a correct understanding of the relationship between the rule of law and economic development, and use it as a guide to build a positive and healthy relationship between government and enterprises, seeking a "pro" and "clean" relationship between government and business. Only by doing so can we achieve the goal of being truthful, pragmatic, and effectively promoting the implementation of the construction of a business environment.

Thirdly, the original intention of shaping a good business environment for private enterprises is to implement fair competition, respect and maintain the status and rights of legitimate market entities. Therefore, it is necessary to avoid using theories such as instrumentalism and stage integration to mobilize the enthusiasm and enthusiasm of the private economy to participate in the comprehensive construction of socialist modernization.When incorporating the private economy into the "everyone is a business environment, everything is related to the business environment", the characteristics of allowing private entrepreneurs to endure hardship and dare to create have become valuable assets in the cause of socialism with Chinese characteristics.

Biography of Thinkers

Shen Kaiyan, Director of the Institute of Economics, Shanghai Academy of Social Sciences, Second level Researcher, and Doctoral Supervisor. Vice President of Shanghai Economic Society, Vice President of Shanghai Women's Studies Society, Member of Shanghai Political Consultative Conference, and Leading Talent of Shanghai. The main research areas include political economy, China's economic reform and development strategy, regional economy and integrated development of the Yangtze River Delta, innovation economy, etc. Hosted over 50 national and provincial level projects, published over 30 academic monographs, and published over 100 academic papers. Representative works include Shanghai Economic Development Report, Comprehensive Deepening Reform Process Report, Urban Functional Transformation Report, and Industrial Structure Adjustment and Transformation Analysis. Has won the first and second prizes for outstanding achievements at the provincial and ministerial levels multiple times.

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