Local governments throughout China are actively reforming the business regulatory environment to make it easier for the private sector to grow, said a report released yesterday by World Bank Group member IFC and the Chinese Academy of Social Sciences (CASS).

The coastal cities offer the friendliest environments for doing business, said the "Doing Business in China" report, which examines the ease of operating a private business in the country. Among 30 cities canvassed, Guangzhou, capital of Guangdong province, was found to have the friendliest environment for private businesses. Other leading cities included Nanjing, Shanghai, Hangzhou, Jinan, Fuzhou, Tianjin and Beijing.

Although cities in the prosperous coastal and southern regions have adopted more extensive reforms, top reformers also include cities in western inland areas, where Chongqing and Chengdu have piloted a number of economic initiatives, the report said.

From 2006 to early 2007, 53 reforms were introduced in the cities covered in the report. The report looked at four tasks to determine whether local government regulations facilitate or constrain business activity: starting up businesses, registering property, getting credit (creating and registering collateral) and enforcing contracts.

The business environment in many places has improved significantly, but there are still challenges in some cities. These obstacles are shaped by the cities' economies, the report found.

In Hangzhou, for example, investors must undertake 12 procedures over 30 days to get government approval to start a business. In Hong Kong, the process includes five steps taken over 11 days. However, in Australia, it takes only two steps completed over two days, according to the report.

While the overall business environment has greatly improved, it still fails to meet private investors' needs, analysts said, pointing out that getting bank loans is the biggest obstacle for private enterprises, especially small companies.