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

BEIJING - 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 list is the first of its kind compiled by the National Development and Reform Commission (NDRC), following which investigations into violations of the negative-list-based market access regime will be intensified and a regular report system of the typical violations will be established.

The cases involve some local governments and authorities erecting market access barriers by adding extra administrative licenses, imposing illegal administrative charges, and demanding enterprises to set up subsidiaries locally, among others. Irregularities in all 18 cases have been rectified, the NDRC said in a statement.

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 negative list for market access and the negative list for foreign investment jointly form a unified legal system for market access in China. Both domestic and foreign investors only need to consult the negative list to know whether they can invest in their industries and fields.

The negative list system of market access is not only a key part of the modern market system but also an important means of stabilizing investment and expectations, said Guo Liyan, a researcher with the Chinese Academy of Macroeconomic Research.

Revised on an annual basis, the 2020 negative list for market access trimmed the number of items to 123 from 131 in 2019 and 151 in 2018. Besides, the number of items that are off-limits for foreign investors will be cut to 31 in the new 2021 national negative list from 33 in the 2020 version.

The revision of the negative list is conducive to further easing market access, boosting fair competition, and promoting the better integration of an efficient market with a capable government, said Meng Wei, an NDRC official.

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.

Efforts will be made to abolish the regulations and rectify practices that hinder the building of a unified national market to ensure fair competition, said Lian Weiliang, NDRC deputy director, in a recent interview with Xinhua.

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 formulated high-standard policies, including implementing a guideline for improving the business environment and enacting the Foreign Investment Law, to establish long-term and law-based mechanisms to ensure that problems that have been tackled do not recur.

China has witnessed an increase in the number of new taxpaying market entities in the first nine months. A total of 9.7 million new market entities handling tax-related business were registered during the period, up 16.1 percent from the same period last year, data from the State Taxation Administration showed.

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.