Shanghai set to sustain growth momentum by promoting its business environment
As the Chinese saying goes, “a whole year’s work depends on a good start in spring.” This insight, though rooted in agrarian society, is still relevant today.
In recent years, particularly in view of China’s heady growth for decades, the spring is also a time when some economists try to overead the closure of a few shops.
So far the Chinese economy has an uncanny way of refuting the doomsayers. For instance, the latest official statistics suggest that Shanghai is doing fine in terms of utilization of foreign investments.
According to sources from Shanghai Commission of Commerce, in January, the number of new foreign-funded projects jumped over 69 percent year on year to 563, with total contractual foreign investment in the city surging nearly 198 percent to US$10.1 billion, and actual use of foreign capital up 33.5 percent at US$1.42 billion.
Those statistics, by clearing any doubts about an auspicious good beginning, also throw into relief the challenge of how to sustain the growth momentum.
A conference on improving the city’s business environment, held immediately after the Spring Festival, arrived at this consensus: For Shanghai to sustain and leverage its development advantage, it cannot simply rely on handouts of preferential policies, nor undercut its competitors by cutting low factor costs.
Only by ameliorating the business environment can the city hope to continue to achieve sustained success.
Streamlining administrative procedures can help business to grow with more ease. In a recent interview with the Xinhua news agency, Fang Xiangyang, Chairman of China Post Science and Technology Co under China Post Group, said that although his company had been recognized as “high-tech” in Beijing, the company’s status needed to be recognized again when it came to Shanghai not long ago.
This used to be complicated, costing three years of red tape. But this time, thanks to coordination among different government departments in Putuo District, the procedure only took 20 days.
In the past year, Shanghai had drawn up a number of policies aimed at expanding opening-up, supporting private enterprises, all in an effort to lead up to major breakthroughs in reforms. Specifically, particular effort has been directed at facilitating data collection across different sectors and departments, so as to achieve pooling of resources.
The shift from departmentalism to coordination and cooperation among different departments represents a major ideological leap forward, catalyzing various grassroots policy initiatives in districts like Pudong, Jing’an, Changning or Jiading.
Such initiatives are paying off.
In the World Bank Group’s Doing Business 2019 report, an annual ranking of different economies on business regulations and ease of doing business, China is ranked 46th, advancing 32 places from its previous rank at 78th, with Shanghai contributing a weight of 55 percent. This is only understandable: By the end of January, a total of 674 regional headquarters of multinational corporations had been set up in Shanghai, among which were 90 Asia-Pacific headquarters.
Figures speak volumes
These figures speak volumes for Shanghai’s leading position in opening-up and utilizing foreign investments.
If Shanghai has already gone to such lengths in creating a favorable business environment, then why did the city zero in on its business-friendliness the first thing after the Spring Festival?
Municipal sources explain this initiative as a major work entrusted by the central government, in addition to being internally driven as the city seeks an economic upgrade and sharpens its core competitiveness, and as a key strategy in countering economic slowdown.
The city’s latest pro-business policy initiatives published in February, covering no less than 25 aspects, provide quantative criteria for each administrative procedure.
In starting up a business, for instance, the number of procedures has been trimmed from four to three, while the time it took to go through is reduced from nine to a minimum of three days.
The success of Pinduoduo provides a revealing footnote to Shanghai’s business environment. Since it was founded in September 2015, the company’s active user base went from zero to 100 million in the first year and then to 200 million in the second year. In three years’ time, it boasted over 400 million active users on its platform, making it arguably the world’s fastest growing company in terms of client acquisition.
Chen Lei, one of the founders of the company, attributed Pinduoduo’s success to Shanghai’s initiatives in cutting institutional transaction costs, the reserve of quality talent, the city’s developed information service and logistic services.
As the municipal government realized, the assessment of a business environment is not subject to a Work Bank Group ranking, but to the perception of the enterprises and the people, in the likes or dislikes they have posted.
As departments at municipal and district levels vie with each other in optimizing the business environment and enhancing the efficiency of government services, so as to supply better, more customized services to enterprises, we are hopeful of a year of good harvests.
The article is adapted from a Xinhua report.