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Easier market access a recipe for China’s sound business environment
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Easier market access a recipe for China’s sound business environment

Earlier this month, China’s top economic planner published a list of 18 typical cases of local governments and authorities setting up illegal market barriers that curb fair competition.

The National Development and Reform Commission (NDRC) has compiled the first ever such list. Upon completion of investigations into violations, a regular report system will be established detailing the most common violations.

Some local governments and authorities have been accused of imposing market access restrictions by adding additional administrative licenses, imposing unconstitutional administrative charges, and asking enterprises to establish local subsidiaries. In a statement, the NDRC stated that all 18 cases had been remediated.

The negative list for market access, acting as an important “traffic light” for capital at the market entry point, outlines sectors, fields and businesses off-limits for investors, and concurrently gives the green light to all other areas.

The unified legal system of market access in China is made up of the negative list for market entry and the negative listing for foreign investment. Foreign and domestic investors can both consult the negative list to determine whether they are allowed to invest in their respective industries and fields.

Guo Liyan, a researcher at the Chinese Academy of Macroeconomic Research, stated that the negative list system of market accessibility is not only a crucial part of the modern market system, but also a means of stabilizing investment expectations and expectations.

The 2020 negative market access list was updated annually. It reduced the number to 123 items, down from 131 and 151 respectively in 2019. The 2020 national negative list for market access was revised annually to reduce the number of items to 123 from 131 in 2019 and 151 in 2018.

Meng Wei, an official at the NDRC, stated that the revision of the negative lists is conducive to further easing access to the market, boosting fair competition and promoting the better integration a more efficient market with a capable country.

The negative list approach is just one endeavor among the country’s efforts to clear the roadblocks on the way toward a market-oriented and law-based business environment for all market players.

China has recently announced in a tone-setting economic meeting to set up “traffic lights” for capital, in a bid to give full play to the positive role of capital while effectively reining in its negative effects.

As a crucial tool for regulating traffic flow, the “traffic light” metaphor sends a clear message that China will step up efforts in smoothing the passage for orderly capital flow and steering it toward stable and healthy development to foster fair competition.

According to Lian Weiliang (NDRC deputy director), efforts will be made in order to abolish regulations and to rectify practices that prevent the building of a unified market to ensure fair competitors.

Problems including local protectionism should be addressed to support China’s dual circulation development paradigm, in which domestic and overseas markets reinforce each other, with the domestic market as the mainstay, Lian noted.

The country has also developed high-standard policies. These include a guideline to improve the business environment and the Foreign Investment Law to establish long-term, law-based mechanisms to ensure that the problems that have been addressed do not recur.

China has seen an increase in the number taxpaying market entity in the first nine month. The total number of new market entities that handle tax-related business was 9.7 million, an increase of 16.1 percent over the same period last fiscal year, according to data from the State Taxation Administration.

In 2020, China was placed 31st among 190 economies in the World Bank’s ease of doing business ranking, rising from 91st position in 2012, according to a white paper titled “China’s Epic Journey from Poverty to Prosperity.

“The country will continue to provide better support and service to market entities, create a fair market environment, protect intellectual property rights, and coordinate efforts to solve the practical problems encountered by enterprises, Lian said.

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