China has been ranked the fourth-best in terms of business ease reforms among 175 economies, following Georgia, Romania and Mexico.
The World Bank and the International Finance Corporation (IFC), the private sector arm of the World Bank Group, which produced the ranking, praised the nation for speeding up economic reform.
"China has picked up the pace of its reforms, like speeding business entry, increasing investor protections and reducing red tape in cross-border trading, during the past year," Caralee McLiesh, an author of the report, said in a video conference yesterday.
The report "Doing Business 2007: How to Reform" said China had reduced the time taken to register a business from 48 to 35 days and cut the minimum capital required from 947 percent to 213 percent of per capita income, making it easier for entrepreneurs to start new businesses.
China has also established a credit information registry for consumer loans, the report said. Now 340 million citizens have credit histories, improving their access to credit.
Meanwhile, amendments to company law have strengthened investors' protection against insider trading and new online customs procedures have eased trade pressure by reducing import and export delays by two days, the report said.
"The recent adoption of the corporate bankruptcy law, though not included in the measurements for this year's report, is another indication that China is making significant reforms," said McLiesh.
The reforms helped China go up 15 places from last year in an overall ranking on the ease of doing business with the country now ranking 93rd overall.
The ranking is based on 10 indicators: starting a business, dealing with licenses, employing workers, registering property, enforcing contracts, getting credit, trading across borders, protecting investors, paying taxes and closing a business.
"China still has a long way to go to upgrade its ranking," said McLiesh.
She highlighted two areas in which the government needs to improve further to make doing businesses easier.
The first is further relaxation of regulations surrounding business start-ups and licensing. Businessmen still need to complete 13 procedures and spend 15 days applying for a business license.
New company law requires a minimum capital of 30,000 yuan (US$3,750) for a start-up, which is still quite expensive, as most countries do not have minimum capital requirements for start-ups.
The other is a simplification of the tax system. According to McLiesh, China's tax regime is relatively complex and lacking in transparency. A unified, simple and transparent tax system would be easier for businesses to comply with. China is also relatively weak in investor protection and legal infrastructure.
In the report, Singapore was ranked as the easiest place to do business, followed by New Zealand and the United States.
The Hong Kong Special Administrative Region ranked fifth, up from sixth last year.
The report said Hong Kong has made reforms including improved investor protection through greater availability of company documents, simplified documentation and electronic filing of trade manifests while more reforms are yet needed on property registration and license issuance, to provide a better business environment.
(China Daily September 7, 2006)
