China Is Still Regarded As One of the Major Strategic Markets

By Andrey Guo

In recent years， with the deepening of the“streamline administration， delegate power and improve services” reform， actively improving various laws and regulations， and vigorously implementing policies and measures such as tax reductions and fee reductions， Chinas business environment construction has seen positive results.

Recently， the Chinas Business Environment Annual Report （2021） （hereinafter referred to as the Report） released by the China Council for the Promotion of International Trade shows that nearly 90% of enterprises surveyed are satisfied with the policy of stabilizing foreign investment. Although the spread of COVID-19 since the beginning of March will have a significant impact on 2022 revenue， the vast majority of enterprises surveyed said that their short-term investment plans will not be changed， and China is still regarded as one of the major strategic markets.

For five consecutive years， the policy environment has become the first-class index that attracts the most attention of enterprises

Since 2016， the China Council for the Promotion of International Trade has conducted large-scale business environment surveys and published annual reports throughout the country for six consecutive years， reflecting both achievements and problems in business environment construction， researching and making suggestions， and actively helping to optimize the business environment. In 2021， nearly 5，000 enterprises were investigated in various ways， covering 29 provinces and cities across the country， and a special study was conducted on the border trade environment and related issues. On this basis， the Report was compiled.

The Report shows that despite the significant impact of COVID-19， the port business environment is still optimized. According to the Report， the evaluation of customs service ranks second among 12 indicators， with a score of 4.51. The evaluation of three secondary indicators， namely， customs clearance， inspection and quarantine and entry and exit of people， has been improved compared with 2020.

Yu Yi， spokesperson and director of the office of the China Council for the Promotion of International Trade， said that according to the breakdown indicators， the interviewed enterprises had the highest evaluation of officials integrity， reaching 4.52 points， and had the highest expectation of policy fairness， reaching 4.44 points. From the regional perspective， the eastern region has the highest evaluation of the policy and government environment， and the evaluation of the central region has increased by 4% compared to 2020. From the perspective of the nature of enterprises， foreign-funded enterprises have the highest score on policy and government affairs， and the evaluation of state-owned enterprises has increased the most compared to 2020， with an increase of nearly 5%.

The national integrated online supervision system has initially been completed， the construction of “Internet + Supervision” system has been developed， and the influence of the State Councils “Internet + Supervision”platform and small programs has been continuously improved. According to the Report， in 2021， enterprises evaluation of Chinas policy and government affairs was 4.45 points， 0.02 points higher than that in 2020. Among them， the evaluation of officialsintegrity is 4.52 points， reaching an excellent level， ranking first among the secondary indicators of policy and the government environment.

In 2021， China increased tax reductions and fee reductions by about RMB 1.1 trillion， deferred tax payments of RMB 216.2 billion for small and medium-sized enterprises in the manufacturing industry， and reduced， refunded and deferred tax payments of RMB 27.1 billion for coal， electricity and heating enterprises. According to the Report， in 2021， the total enterprise rate （the percentage of contribution to total profit） decreased from 21.96% in 2020 to 15.46% in 2021； the total tax rate dropped from 34.15% in 2020 to 24.84% in 2021， and enterprises felt real benefits.

According to the survey， in 2021， over 70% of enterprises achieved revenue growth. Utilizing local resources and expanding market are the main reasons for enterprises to invest.“Chinas consumption growth and middle-class expansion” has replaced “digital technology development” as the most important business opportunity for enterprises. Over 50% of foreign-funded enterprises regard China as the worlds top investment target.

Under the impact of COVID-19， the sales revenue of 10.7% enterprises dropped by over 50%， that of 31% of enterprises dropped by 20%-50%， and only about 30% enterprises were unaffected or their sales revenue increased. Despite this， 83% of the enterprises surveyed have achieved breakeven through structural adjustment and cost reduction. Enterprises are generally optimistic about development prospects in the post-pandemic era， and only 5% of them are pessimistic. Among them， the enterprises engaged in high-tech industries are the most optimistic about the prospect of the post-pandemic era， and only about 3% of enterprises are pessimistic.

Green economy， digital economy and rural economy have great potential

This year， in the face of uncertain and unstable factors such as the Russia-Ukraine conflict， the pandemic and a poor supply chain， the Chinese government has accelerated the introduction of a series of policies and measures to stabilize foreign trade and foreign investment. Because of its broad market opportunities and development potential， China has continued to be a hot spot for global investment. In the first quarter， Chinas absorption of foreign capital increased rapidly year-on-year， and the actual utilization of foreign capital in the whole country at RMB 379.87 billion， up by 25.6% year-on-year.

The survey shows that 86% of the enterprises surveyed are satisfied with the policy of stabilizing foreign investment. At the same time， enterprises hope that the specific implementation of pandemic prevention and control measures can be more accurate； further clean up the investment obstacles outside the list， and enjoy preferential policies such as importing to China and investing in the west； gradually expanding the opening of more service areas； accelerating the implementation of major projects. Some European-funded and Japanese-funded enterprises hope that local governments will ensure the use of electricity for employment houses， promoting cross-border trade， issuing detailed rules for the implementation of environmental protection policies， continuing to reduce taxes and fees， and accelerating the landing of major projects.

The Report shows that many surveyed enterprises suggest that the first is to speed up the building of a high-quality and efficient service-oriented government； the second is to further enhance the scientific nature of relevant policies； third， make overall planning and take multiple measures simultaneously to effectively reduce the production and operation costs of enterprises； fourth， through policy innovation and guidance， help enterprises solve the bottleneck of attracting， retaining and using talent； fifth， broaden financing channels， reduce financing cost， and alleviate financing difficulties and expensive problems of enterprises； sixth， scientific planning and timely improvement of regional industrial supporting system； seventh， provide timely guidance and support for enterprises to deal with uncertain risks.

The Report suggests that enterprises that are seriously affected by the pandemic and have difficulty in repaying loans should be extended or renewed； the repayment period should be reasonably extended； financing channels should be broadened； the construction of financing guarantee system with state-owned investment should be gradually improved； foreign-funded enterprises should be encouraged to raise funds overseas； the feasibility of foreign legal representatives credit reporting should be explored； corresponding credit mechanisms established and the process of insurance policy claims related to China Export & Credit Insurance Corporation should be straightened out.

In addition， regarding customs clearance facilitation， the Report suggests that multidepartment joint inspection and “one-stop”operations should be actively promoted， measures such as destination supervision and factory inspection should be appropriately implemented according to enterprisesapplications to improve customs clearance efficiency， and a fault-tolerant mechanism for unprincipled issues in cross-border e-commerce should be established.

A number of interviewed enterprises said that the official release of The Guideline on Accelerating the Establishment of a Unified Domestic Market， jointly issued by the Communist Party of China Central Committee and the State Council on April 10th， is great news for foreign enterprises investing in China， and will greatly enhance their stability in China. The Guideline aims to establish a unified market system and rules， break local protection and market segmentation， break through the key blocking points of the economic cycle and promote the smooth flow of commodity resources， so as to finally build a unified domestic market that is highly efficient， rules-based， fair for competition， and open.

Recently， the American Chamber of Commerce in the Peoples Republic of China held an online press conference of the 2022 Social Impact Report， and released the Green Low Carbon Report， the Digital Economy Report and the Rural Revitalization Report， suggesting that multinational companies should seize the development opportunity， combine their business strategies with Chinas development goals， participate in related fields extensively， and achieve common development.

Yu Yi said that under the new development pattern， Chinas market potential will be fully stimulated， and China will be further opened. The China Council for the Promotion of International Trade will continue to play its role as an important bridge for exchange and cooperation between Chinese and foreign industrial and commercial circles， and provide better services for foreign investors to invest in China.