Evaluation system will help build good local business environments

AFTER PILOTING AN ASSESSMENT SYSTEM IN 22 CITIES, the National Development and Reform Commission will evaluate the business environment of all cities above the county level from 2020. Beijing Youth Daily comments:

Since the beginning of this year, improving and optimizing the business environment has become an important means for promoting economic transformation and stable economic growth. Many local governments have taken varied measures — mainly broadening market entry, encouraging innovation and reducing taxes and fees — to enhance their local business environments.

The assessment evaluation system established by the commission, the first of its kind, will provide the local policymakers with a reference to optimize their arrangements.

As the results of this year’s test assessments in the pilot cities indicate, the evaluation system, instead of being a one-size-fits-all standard for policies, emphasizes cities implement policies suitable for the local situation.

For instance, Beijing scored high this year in the pilot program, because its pro-business policies clearly focus on opening up the financial sector and other service industries, and further improving the quality and efficiency of the capital city’s use of foreign investment, which represent the direction of its future economic restructuring.

The optimization of a locality’s business environment entails transformation of the government from being the economic planner to a service provider.

That requires some government departments to have more foresight so as to surrender parts of their revenues from taxes and fees to promote innovation and growth. More importantly, the rule of law must be practiced to make the circumstances more predictable.

Before an effective supervisory mechanism is established to check the balance with local governments, and before the local governments have sufficient revenues to cover their duties, the progress of these reforms, despite them being spurred forward by the central authorities, will not be plain sailing.

The ideal way to optimize the business environment is that the local governments recognize various market entities, including private enterprises, and provides various services and policy support for them.