China ranks fourth globally for reform efforts

October 02, 2006 | BY

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In Doing Business 2007: How to Reform, the World Bank and International Finance Corporation rank China as the fourth-best reformer globally (behind Georgia,…

In Doing Business 2007: How to Reform, the World Bank and International Finance Corporation rank China as the fourth-best reformer globally (behind Georgia, Romania and Mexico), and as 93rd out of 175 countries worldwide in terms of ease of doing business. Singapore is ranked first in the global rankings on the ease of doing business, while Hong Kong comes in fifth place.

The report on the ease of doing business was based on various criteria, including how complicated it is for firms to start up, deal with licences, obtain loans, hire workers, pay taxes, enforce contracts, trade across borders and close businesses.

China has reduced the time it takes to register a business from 48 days to 35 days, and has also reduced the minimum capital required to start a business. Other positives for China include its amendments to the PRC Company Law to strengthen investor protection against insider trading, as well as new customs procedures, which make trade easier by reducing the time it takes to import and export goods by two days.

Caralee McLiesh, a co-author of the report, highlights two areas the PRC government needs to further improve upon. One is further relaxing regulations for starting a business and obtaining a licence, namely removing the minimum capital requirement of Rmb30,000 (US$3,750) for start-ups (as most countries do not have such requirements). The other is simplifying the tax system, which is complex and lacks transparency. McLiesh adds that China still has a long way to go to upgrade its ranking, and that businesses are continuing to invest in China now because of the size of the market.

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