The World Bank yesterday hailed China’s “major progress”
in improving its business climate, but called for more efforts to
improve creditors’ rights and creditor information
systems.
Michael Klein, World Bank/International Finance
Corporation vice president for private sector development and IFC
chief economist, applauded the nation’s development over the past
20 years, adding that he was confident that China will continue to
catch up quickly with the rest of the world in the coming decade.
Klein yesterday released a Chinese version of Doing Business in
2004: Understanding Regulation, a new yearly report that
provides comparative data on the business climate in 133 countries
worldwide.
The Chinese version was accompanied by a country report
highlighting China’s performance on five key indicators: market
entry, employment, contract enforcement, creditor rights and
creditor information and bankruptcy.
The report indicates that China performs well on business
start-up costs, at 14 percent of per capita income, well below the
East Asia regional average of 56.8 percent and close to the 10.2
percent average among members of the Organization for Economic
Cooperation and Development (OECD).
It takes an average of 46 days to start a business in China, the
report says, compared with the East Asia regional average of 66
days.
But the report offers less pleasant reading when it comes to
China’s performance on creditors’ rights and creditor information
systems.
“Credit information sharing is important because it opens up
credit markets by expanding access to first-time borrowers and
repeat borrowers with good credit histories,” said the World
Bank.
Although the government is working to build a credit information
system, the current lack has made it difficult for China’s small
and medium-sized enterprises to obtain necessary funding, Klein
noted.
The absence of such a system did not impede China’s economic
growth, but “if China wants to promote local companies and
entrepreneurs, moving in that direction is a major challenge,” he
said.
Doing Business collects and analyzes data on 133
countries, including OECD countries. The analysis is based on
assessments of each country’s laws and regulations, with input from
and verification by local experts who assist entrepreneurs in
starting a business, hiring and firing workers, getting credit, and
closing a business.
The report enables countries to benchmark themselves against
neighbors, major competitors and any country that has developed
best practices on the various indicators.
“Doing Business is a tool for policy makers and the
public to give them quantitative ways to measure business
regulations to see how well they allow entrepreneurs to start,
operate and grow businesses,” said Klein.
Among other findings, the report concludes that regulation in
poorer countries is more cumbersome for all aspects of business
activity.
Heavier regulation is generally associated with greater
inefficiency in public institutions--longer delays and higher
costs--and results in higher unemployment, increased corruption and
lower productivity and investment, but not in the improved quality
of private or public goods, it says.
(China Daily April 9, 2004)