Enhancing the Business Environment in the Greater Bay Area through Incorporating World’s Leading Methodologies and Practices
Date: Dec 28, 2023
Author: Dr. Yu Zongliang, Director, Research Center for Free Trade and Innovation, CDI
The Guangdong–Hong Kong–Macao Greater Bay Area (GBA) is among China’s most open, economically agile, and business-friendly regions. As of 2022, the GBA's GDP was approximately CNY 13.04 trillion, with a per capita GDP of approximately CNY 150,900. Despite occupying less than 1% of China's land area and being the home of only 5% of its population, the region contributes 11% of the nation's total economic output. In December 2023, the National Development and Reform Commission (NDRC) of China unveiled an action plan to further enhance the GBA's business environment.
Various domestic and international business environment rankings indicate that a better business environment correlates with greater economic prosperity. Therefore, a conducive business environment is crucial for promoting prosperity at the national, regional, and city levels, and serves as a key aspect of economic competitiveness. Enhancing the business environment in the GBA will support the creation of a first-class bay area and world-class city cluster that is dynamic and internationally competitive.
At the micro-level, the action plan revolves around effectively serving and enhancing the sense of growth and satisfaction among businesses by considering their complete lifecycles. This includes encompassing every stage of their development, reducing institutional costs, and ultimately benefitting the public.
From a reform perspective, the action plan highlights the transformation of government functions. The reform and innovation of internal systems and mechanisms fall under the umbrella of constructing a supportive environment within the superstructure.
By integrating advanced concepts and experiences globally, the GBA aims to establish a business environment system that aligns with international standards and achieves a world-class level of marketization, rule of law, and internationalization. Market connectivity levels will significantly improve, enabling the region to attract and allocate more global resources.
To achieve these goals, it is crucial to properly manage the following six relationships.
First is the relationship between the government, the market, and society. The construction of a favorable business environment entails collaborative efforts among diverse entities, such as the government, the market, and society, rather than unilateral actions by the government. Subsequently, the action plan includes aspects concerning social organizations, diversified dispute resolution mechanisms, and credit-building.
Second is the relationship between innovation and replication. Specifically, the various reform measures targeting the business environment are aimed at producing institutional innovations that can be replicated, rather than providing long-term exclusive policies for the few cities.
Third is the relationship between micro-reform and systematically integrated innovation. The action plan emphasizes locating and addressing the most pressing concerns of local people, even if small, then enabling an incremental and rapid progression of systematic initiatives to develop a better business environment.
Fourth is the relationship between local innovation and central facilitation. Coordination of top-level design with grassroots exploration is essential to fostering regional initiatives. The local grassroots level is closer to the market and is better informed and more up-to-date regarding the specific needs of local business entities. Therefore, the local level should be granted greater autonomy to boost reform and innovation.
Fifth is the relationship between policy and legal support. A clear and credible legal environment, in which the security of property and transactions is guaranteed, will enhance investors’ confidence and willingness to invest in and promote the market. Thus, it is necessary to promptly and effectively promote the establishment, modification, and interpretation of relevant laws, regulations, and rules to ensure the legality of reforms. This will also enhance the predictability and certainty of business environment reforms.
Last is the relationship between Hong Kong, Macao, and the nine mainland cities within the GBA. The GBA is unique, with its "one country, two systems", three customs territories, three legal systems, and three currencies, and requires Hong Kong, Macao, the mainland cities, and the central government to collaboratively promote market integration within it. This consists of compliance with international economic and trade rules and breaking the reliance on past practices of opening borders between Hong Kong, Macao and the Mainland.
How China Should Navigate Through the Economic Challenges
Date: Nov 23, 2023
During a recent interview, Prof. FAN Gang, President of China Development Institute, provided perspectives on the development of large enterprises, insights on the importance of fostering private enterprises and how China should navigate through the economic challenges that it faces now.
Synergies and Challenges in Diverse Business Scales
Businesses of all scales have the opportunity to innovate in a variety of ways. While small businesses may specialize in specific technological fields, they often struggle to achieve systematic technological development. On the other hand, large enterprises tend to integrate multiple technologies to create more comprehensive products. The large enterprises play a distinct and pivotal role in economic modernization especially within the innovation ecosystem, as they are able to catalyze a network of SMEs and integrate them into the innovation chain.
Furthermore, thanks to their ample capital and profits, large enterprises are able to make long-term, sustained investments into R&D, thereby propelling systematic and continuous innovation in fields like cloud technology and AI. Nevertheless, the key lies in establishing oligopolistic competition within the industry structure while averting monopolization, and ensuring ample space for innovation for SMEs.
Nurturing Private Enterprises for Economic Progress
When comparing China's private enterprises with state-owned enterprises (SOEs), significant differences exist. It is crucial to focus on the development of private enterprises as they are critical to China’s economic growth.
State-owned enterprises, due to their close ties with the government and other entities alike, exhibit weaker independence. Moreover, they operate under stringent institutional frameworks and scrutiny in decision-making, necessitating cautious consideration for the use of public funds and risk mitigation, thereby limiting their investment in innovation and capacity in risk-taking. In contrast, private enterprises are more responsive to market signals, showcasing greater flexibility and advancement in innovation. Meanwhile with their own capital at stake, the private enterprises bear the consequences and potential losses of taking risks to invest in innovation, which in turn brings stronger impetus for success. Therefore, in a market economy, private enterprises exhibit exceptional performance, particularly in high-tech industries.
Despite their significant role in the economy, large enterprises often face disadvantages in the market competition, especially with respect to financing, market access, and policy support. It is important to take a dialectical view of these realities and not adopt policies to suppress private enterprises. The future of China's economy lies in fair policies and programs that foster the development of private enterprises rather than transforming them into SOEs.
Navigating Through the Economic Challenges: Insights and Prospects
The biggest economic challenge that China faces at the moment is the insufficient demand which has led to a slowdown in economic growth. This situation is not the result of a single factor, but stems from multiple causes such as the impact of the pandemic on the industrial chain, unemployment and decreased expectations for income growth. However, stimulating demand has become particularly difficult in the current economic cycle. Hence, adept management during economic downturns is crucial for China. The government plays a key role in boosting demand, especially when private demand is insufficient, and government demand can serve as a supplement. Yet, inadequate future expectations among businesses and residents are also significant contributors to weak demands. Under such circumstances, the government should take more targeted measures to invigorate overall demand rather than just stimulate consumption. Addressing these challenges requires government wisdom and strategies to effectively manage cyclical economic fluctuations, and more importantly to guide the economy safely through downturns.
As for the future of the Chinese economy, international opinion suggests China might echo Japan's "lost 30 years". However, differences emerge when comparing the two, such as China’s current urbanization rate and overall economic development, and that of Japan in 1991. Japan was already a highly developed economy in 1991 with an urbanization rate of 77.4%, while China is currently at 65.4%. Therefore, China is still in a relatively stable growth phase rather than a continuous decline. Additionally, in terms of government debt ratios, the total debt ratios of China's central and local governments are similar to those of Japan's in those years, but China has huge amount of state-owned assets and a lower gearing ratio, which will provide more room to boost the economy once state-owned assets are utilized. Last but not least, the vigilance of China towards debt risks in both the financial and residential sectors far surpasses that of Japan during the corresponding period.
As a developing country, short-term economic fluctuations are normal. Although China is currently experiencing a downturn, it doesn't indicate the start of a long-term slump but is most likely a short-term fluctuation.
The 2023 Global Chinese Economic & Technology Summit
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The World Chinese Economic Summit was founded by Tan Sri Lee Kim Yew and Tan Sri Michael Yeoh in 2009. It was first held in the Palace of the Golden Horses, Malaysia and hosted by its Founder and Patron, Tan Sri Lee Kim Yew.
Since then, WCES has been held in Melbourne, Chongqing, London, Melaka, Macao, Beijing, Bonn, and Penang. The Summit emphasized the role of the Global Chinese and connecting the Global Chinese Diaspora as well as promoting learning between East and West.
Resulting from the Global Pandemic and focusing on global recovery, the importance of global partnership, global leadership and global cooperation is imperative. Technology has also become a game changer and a key driver of the global economy – digital technology and innovations, green technology, health technology and agrotechnology will enhance global growth. The growing focus on sustainability also requires technological innovations and solutions.Recognizing these strategic trends of global geopolitical and geoeconomics forces and the power of global partnerships in this new global era, the WCES has been transformed into the Global Chinese Economic and Technology Summit to strive towards sustainable globalization.
China Development Institute has been working closely with the World Chinese Economic Forum committee and co-organize the series of events since 2011. The series has been an essential platform that not only provides practical insights for business and public policy leaders, but also an opportunity for the members of global Chinese community to gather together and exchange ideas.
Date: Nov 6-7, 2023
Hosts: China Development Institute and KSI Strategic Institute for Asia Pacific
Venue: CDI Mansion and Shangri-La, Shenzhen
Governor of the Hungarian National Bank Dr. György Matolcsy Visits CDI
During his visit to China, Dr. György Matolcsy, Governor of the Hungarian National Bank (MNB) and former Minister of National Economy of Hungary, visited CDI on Oct 31, 2023.
Although the global economy has been largely affected by geopolitical tensions and growth slowed, the overall economic development is observed to has been following pervious cycles. Both parties agreed that it is critical for economies to remain vigilant and aware of the global economic cycle while preparing and utilizing policy tools for mitigation. CDI experts also briefly introduced the development of Guangdong-Hong Kong-Macao Greater Bay Area and China’s financial sector.
CDI Delegation Visits Belgium and Hungarian Think Tanks and Financial Institutions
From Sept 16 to 23, 2023, CDI delegation led by Dr. Guo Wanda, Executive Vice President of CDI, visited Belgium and Hungarian think tanks and financial institutions, including Bruegel, European Policy Centre, EGMONT-Royal Institute of International Relations, KBC Group, Hungarian National Bank, Institute of World Economics of the Hungarian Academy of Sciences and China-CEE Institute. During the meetings, CDI delegates and the hosts exchanged views and insights on the global economic outlook, Chinese economic prospects, as well as Sino-EU economic and trade relationship trends.
Cao Zhongxiong
Dr. Cao Zhongxiong is the Assistant President of the China Development Institute and the Director of the Digital Strategy and Economic Research Center. He is also the expert in the economic group of Shenzhen Pioneering Demonstration Zone for Socialism with Chinese Characteristics, the consulting expert to the Legislative Committee of the Shenzhen Municipal People’s Congress, and the Deputy Secretary-General of the Shenzhen Association of Applied Economics.
Dr. Cao’s research focuses on the digital economy. He has led and participated in over one hundred consulting and planning projects for Chinese governments at all levels, as well as Alibaba, Tencent, and other leading digital economy companies. His published research report includes China's Digital Road, Platform Economy Health Index, Shared Innovation-Creating the World's Top Science and Technology Innovation Bay Area, etc.
New Zealand – China Green Ports Dialogue (Invitation Only)
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Date and time: Thursday October 19, 2023 09:00-12:15 (Beijing Time)
Host: China Development Institute and New Zealand China Council
New Zealand and China are both committed to pursuing ambitious national carbon emission reduction goals. Transport emissions including from international air and sea transport are a commonly discussed aspect of global emission reduction strategies. But the adaptations that air and sea ports will need to make to service greener transportation, as well decarbonisation of port operations in other ways, have been less of a focus. Ports in New Zealand and China are, however, making innovative progress in this area.
In this half-day dialogue organised by China Development Institute and New Zealand China Council, senior executives and experts from the air and sea industries in China and New Zealand are gathered to discuss decarbonisation progress and challenges for air and sea ports in New Zealand and China, and to identify future collaboration opportunities between the two countries.
Liu zhijie (Kris Liu)
Director of International Cooperation Department
Education
Master in international relations
He joined China Development Institute in 2017 and now is in charge of liaison and communication with relevant international research institutions, organizing academic events, and assisting with academic research and reports writing. His recent research interests include international relations, Sino-Europe relationship studies. He has also released articles in academic periodicals and press.
The research acticles published
The Strategic Transformation of the European Union and Sino-US-EU Relations
New Trend of EU's China Policy and the Development of Sino-EU Relations
Reunification of Germany and the Development of Sino-German Relations
Political Party Structure of Germany and the New Trend of Its China Policy
Analysis of the US-Israel Special Relationship in the Post-Iran Nuclear Agreement Era
Contact
E-mail: krisliu@cdi.org.cn
Yang Liwu
Senior Research Fellow
Research Focus
Macroeconomics, Policy, Innovation-Driven Growth, Regional Economics, Urban Plan and Urban Development, Industrial Planning, Business Strategy
Education
MBA(City University of Hong Kong) and Msc Hunman Geography(Regional Economics and Urban Plan)( Yunnan University)
Yang Liwu（Steven）is an expert in regional economy, industrial development planning. He has more than 15 years of experience in industrial planning and management consulting. He has deeply involved in the industrial planning and operation management of the "Industrial Upstairs" park which was the most important policy of Shenzhen city in year 2023. He has participated in over 50 government and enterprise industrial consulting projects, and has research experience in High-end Think Tank and specific project experience in real estate companies. He has worked in well-known institutions and enterprises such as China Electronics Corporation (CEC), Yanlord Land Group (Shenzhen Branch, China), CIMC Real Estate, and Quanzhi Engineering Consulting Co., Ltd etc.
Projects
Study on Modern Fashion and Precision Instrument Equipment Industry Clusters in Guangming District Shenzhen, 2023
Study on Industrial Planning of High-quality Industrial Space Pilot Project for Baolong Subdistrict Longgang District Shenzhen，2022
Feasibility Study Report on "Industrial Upstairs"Park in Longgang District, Shenzhen（2021）
Yanlord Land Group (China, Shenzhen Branch) Industrial Real Estate Development Strategic Plan（2018-2025）
Industrial Development Plan for Lincang Industrial Park in Yunnan Province, China
Industrial Development Plan of Qujing City National Economic and Technological Development Zone in Yunnan Province,China
Investment Promotion Plan & Industrial Development Plan for Guizhou Province Luoguan Economic Development Zone
Industrial Development Plan of Clean Energy Intensive Industrial Upgrading Demonstration Area in the Middle Reaches of Jinsha River, Lijiang City, Yunnan Province, China
Zhengzhou City Huashang Hui Project Development Planning (Professional Market Planning)
Research on Upgrading and Renovation of Honey Lake District in Futian District, Shenzhen City
Research on Systematic Deveopment Planning for Shenzhen City Qianhai District(National Free Trade Zone) Development
Research on the Development Strategy of Shenzhen City & Hong Kong Cooperation
Research on the Promotion of the deep integration of the economy of Shenzhen, Dongguan, and Huizhou cities, and expand industrial development zone projects
Industrial Plan for the Central District of Bao'an District, Shenzhen City
Analysis of the Macroeconomic in Shenzhen City（2010）（Project commissioned by the General Office of the Shenzhen Municipal Government)
Research on the Development Strategy of Macau in the Western Pearl River Delta Urban Agglomeration（Project commissioned by the Research Center for Sustainable Development Strategies of the Government of the Government of Macau）
Industrial Planning for Upgrading Saige Group-Hitachi Industrial Park, Futian District, Shenzhen（urban renewal）
Publications
Yang Liwu, Wang Xiaochun, Tang Jiao, Ma Renfeng(2015),“The Study on Economic Spatial Structure and Potential of Western China ：A case of Yunnan Province“，Economic Science Press China
Contact
Email: ylw@cdi.org.cn
China-Europe Webinar - EU's Green Deal and Its Implications for China-EU Cooperation
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Date and time: Wednesday July 12, 2023 15:00-17:10 (Beijing Time)
Host: China Development Institute
The EU’s rules for the new carbon border adjustment mechanism (CBAM) became effective on 17 May. CBAM aims to prevent carbon leakage and restore a level playing field in high-emitting industries. Designed as a border tax, CBAM will inevitably have significant impacts on EU’s trade partners, but also important influence on promoting the adjustment of global climate policy. Looking ahead, initiatives that could lead to mutually beneficial outcomes would positively affect EU-China cooperation, which will be necessary for global climate actions to succeed.
In view of the abovementioned situation, China Development Institute will hold a webinar convening experts from China and EU to discuss the CBAM’s design along with the likely implications for global trade, global climate policy and China-EU cooperation, and provide policy recommendations for both sides.
Focus for Debate
- What impact will the implementation of EU's CBAM bring to China-EU economic cooperation, and how should they be addressed properly?
- How can Chinese enterprises investing in Europe cooperate with the EU side to better adapt to the European Green Deal, considering that the EU has rich experience in the field of green development?
- How to facilitate the development of China's carbon trading market and promote the synergy of rules and mechanisms between China and EU in green development?
- How to coordinate the development of free trade and green trade under the new mechanism of EU's CBAM?
*Available in English and Chinese.
Register in advance for this webinar:
https://us06web.zoom.us/webinar/register/WN_ZaL3kD5MQta3H8SeS-6zcQ
After registering, you will receive a confirmation email containing information about joining the webinar.
