By ZHOU LANXU and ZHONG NAN | China Daily | Updated: 2020-11-10

Reforms include granting wider access, aligning with international practices

For Martin Papp, a US entrepreneur who founded a tea startup in China, the COVID-19 pandemic has pressed a pause button on many of his plans. The virus has forced him to work remotely in Los Angeles for 10 months and suspended the opening of his tea factories.

But all this did not stop his commitment to the Chinese market, which has not only a robust customer base but a business environment that is becoming increasingly fair and friendly, he said.

Like Papp, more and more foreign entrepreneurs in China will benefit from the country's continuous efforts to level the playing field for domestic and foreign-invested enterprises, among other priorities to vitalize market entities in the next five years, experts said.

China has vowed to further promote fair market competition as part of the deepening reform and opening-up efforts to improve its socialist market economy in the 14th Five-Year Plan (2021-25) period, according to a communique of the Fifth Plenary Session of the 19th Central Committee of the Communist Party of China, which was held from Oct 26 to 29.

China will advance reforms to give full play to the role of the market in resource allocation, with major progress to be made in the reforms of the property rights system and market-based allocation of production factors, the communique said.

Experts said the reform plans outlined by the Party's central leadership will provide foreign businesses with greater development opportunities by granting wider market access, improving the rules-based fair business environment and aligning domestic rules with international practices.

CG Lai, CEO of BNP Paribas China, an arm of the French international banking group, said that during the uncertainty wrought by the pandemic, China has remained committed to financial market reform and opening-up and boosting investment confidence among domestic and international investors.

"Access is no longer a problem for foreign institutions in China," Lai said, adding that as one of the first foreign banks that obtained access to underwriting onshore corporate bonds from Chinese issuers, BNP Paribas performed the first lead underwriting by a foreign bank of this kind in December 2019.

The country has removed foreign ownership limits in the futures, securities, mutual funds and life insurance financial sectors this year. This was done after implementing the Foreign Investment Law starting on Jan 1 to better protect the interests of foreign businesses.

China's regulatory reforms have been recognized by the World Bank Group's Doing Business study. During the 13th Five-Year Plan (2016-20) period, the country climbed to 31st globally in terms of the ease of doing business for the 2020 study, versus 90th for 2015.

"I've never experienced a situation where I thought it was more difficult because I was a foreigner or we were a foreign company," Papp said, adding that his business, Papp's Tea, has obtained about 40 new corporate clients this year despite the pandemic.

Market prioritized

The continuous market liberalization has taken place under China's economic governance principle that the market will play the decisive role in resource allocation while the government should exercise its functions better.

The principle underlines minimizing the government's direct intervention in economic activities to give a full play to the strengths of the market, with effective incentives generated from property rights, free flow of production factors, flexible prices, fair and orderly competition and business survival based on competition, experts said.

It is part of Xi Jinping Thought on Socialist Economy with Chinese Characteristics for a New Era, which took shape in 2017 and has served since to guide the country's economic governance.

Xi recently called for Shenzhen, Guangdong province, known as the testing ground for China's reform and opening-up, to deepen reform on all fronts to establish a socialist market economy system of a higher standard.

The city should test reforms in such key areas as promoting market-based allocation of resources, optimizing the business environment and building a high-level open economic system, Xi said at a celebration in Shenzhen on Oct 14 marking the 40th anniversary of the country's first special economic zone.

With bolder moves in reform and opening-up set to unleash the growth potential of China's economy, more foreign businesses will tap the fast-growing market under the country's new "dual-circulation" development pattern, whereby domestic and foreign markets will reinforce each other with the domestic market as the mainstay, experts said.

Zhu Min, head of Tsinghua University's National Institute of Financial Research and a former deputy managing director of the International Monetary Fund, said deepening reform and opening-up to strengthen business exchanges, both within the domestic market and with international markets, lies at the core of China's pursuit of building the new pattern.

One major task under the pattern is to meet people's demand for goods of higher quality, a process that offers huge development opportunities for foreign businesses, Zhu said.

For instance, Saint-Gobain SA, the French industrial conglomerate, plans to enhance its market presence in China's central and western regions, as well as the Guangdong-Hong Kong-Macao Greater Bay Area, for better access to these fast-growing regional markets.

Javier Gimeno, Saint-Gobain's senior vice-president, said many opportunities had sprung from these regions' surging demand for greener building materials, automobile glass, high-end chemicals and other industrial goods, amid an accelerated urbanization pace and smart city development.

Chi Fulin, president of the China Institute for Reform and Development, said international standards have become benchmarks in China's market-oriented reforms, making it easier for global companies to thrive under the country's reform agenda.

Eugene Qian, chairman of UBS Securities, said foreign investment banks are "well-positioned" to participate in the initial public offerings on Shanghai's science and technology STAR Market, which operates under more internationalized and liberalized rules. "We believe that more foreign investment banks will join to sponsor deals on the STAR Market in the future."

Govt's role counts

While stressing the market's decisive role in resource allocation, experts said Xi's economic thought contrasts with laissez-faire doctrines and reflects the features of China's socialist system.

It upholds the active role of the Party and the government when it comes to areas that are beyond the market's capability. Such areas cover macro-control, public services, market supervision, social management and environmental protection, they said.

As the recent plenary meeting of the 19th CPC Central Committee said, the country will pursue a better combination of an effective market and a capable government in the coming five years.

"Any effective market cannot work without a capable government, and every capable government needs to respect laws of the market and adopt it as the premise," said Wang Qingxian, Party secretary of Qingdao, Shandong province.

More efforts urged

Even though China has made substantial headway in properly dealing with the relationship between the market and the government, experts have called for more efforts to vitalize market entities and spur innovation.

Wang Yiming, a national political adviser and senior economist, underlined the need for China to deepen market-oriented reforms to redressing weak links in economic development.

The nation needs to expedite reforms dealing with property rights to provide researchers with stronger incentives for innovation and further market-based allocation of capital by expanding the registration-based IPO system to support new business models, Wang said at the 2020 Global Wealth Management Forum held in Beijing in September.

Papp, the tea entrepreneur, said he hopes that the nation will ease pre-establishment regulations in the drink production industry so that it will take less capital and labor to launch a drink business, making it easier for entrepreneurs to innovate.

Jiang Xueqing and Cheng Yu contributed to this story.