Hainan has been making headway in deepening market-based reforms and improving its business environment since April 2018 when it was tasked with building a pilot free trade zone with the highest level of opening-up.
In a move to make market access easier for companies, the local government, in a draft regulation released to solicit public opinions, has said that it will establish a commitment-based system for market entry to replace license application and administrative approval so as to make it much easier for enterprises to conduct business on the island.
The proposed new system would mean that all market entities have to do before they start operating is to provide the necessary documents required by government departments and commit to abiding by the laws and regulations.
The initiative being taken by China's largest special economic zone is aimed at sweeping aside the institutional obstacles that hamper the free flow of capital, technology and talents so as to foster a new competitive edge for the island.
If it proves to be successful, it will also serve as a model for the rest of the country in terms of institutional innovation that can further invigorate the market and better serve the country's high-quality growth.
The reform sets much higher requirements on government agencies as they will have to make efforts to markedly improve their market supervision and risk alert systems, taking advantage of new technology such as big data. They will have to make sure the enterprises abide by market rules and that if necessary the government watchdogs can timely intervene through administrative means to maintain market order. This will serve as a big test of the governance capability of local officials.
Yet despite these challenges, the move shows that China will never slow its pace in trying to provide market entities with a fair, transparent and procedure-based business environment, as this is required for the country's quality growth.
Thanks to its robust reform agenda, China's business climate has improved remarkably in recent years, as the World Bank's Doing Business study indicates. The group's 2020 report placed China 31st on the 2019 global ranking, compared to 78th in 2017. And the report notes that great progress has been made in such sectors as investor protection and starting a business.
The reform measures being implemented in Hainan, which is at the very forefront of China's deepening of reform and higher-level opening-up, will boost the country's resolve to integrate further with the rest of the world despite rising protectionism and unilateralism in some economies. This bodes well for the country's future development as well as the global recovery from the effects of the pandemic.