China to improve business environment amid growing efforts to stabilize economy
Multiple measures to ensure sound economic growth of around 5% in 2024: analysts
Published: Feb 03, 2024 08:23 PM
Lujiazui Photo:VCG

Lujiazui Photo:VCG

The Chinese government vowed to further improve its business environment at a State Council meeting on Friday as the country started the new year with a slew of supportive policies aimed at stabilizing market confidence and expectations.

Chinese analysts said that further beefing up the business environment, along with a number of other supportive measures, will help the country endure downward pressure and achieve steady growth in 2024, in which many economists forecast the country will grow at around 5 percent.

On Friday, China's State Council held an executive meeting, chaired by Premier Li Qiang, to mull measures to further improve the country's business environment.

The meeting stressed that building a market-oriented, law-based and internationalized business environment was an important measure to cope with the downward pressure on the economy and boost the confidence of business entities.

The meeting also called for more efforts be made to respond to the prominent concerns of business entities, accelerate the development of a large and unified national market, strengthen the assessment of the consistency of macro-policy orientation, and create a stable, transparent and predictable policy environment, according to the meeting.

Amid sluggish global economic growth, rising geopolitical headwinds and a high base, foreign investment inflow to China declined in 2023 for the first time in decades. The country also faces weak domestic demand and a correction of the property market that puts a burden on the economy.

However, the Chinese government has responded with a raft of measures which analysts say will further improve the confidence of market entities including those in the private sector and foreign companies operating in China.

Chinese Vice Premier He Lifeng on January 29 stressed promoting the high-quality development of listed companies in an effort to boost market confidence, stabilize the capital market and advance high-quality economic development, demanding efforts to solve the specific challenges and difficulties faced by listed companies and step up support for quality listed firms.

Stable growth in 2024 can also be seen from the growth targets set by provinces. 

At the local two sessions, a total of 31 Chinese localities have announced their GDP growth target for 2024, and 18 localities including economic powerhouses such as Shanghai, Beijing and South China's Guangdong Province have put the target at around 5 percent or above.

Chinese experts said that there is still vast room for improvement in terms of business environment despite the rapid and significant progress made in past years. Efforts in this direction will help shore up confidence and stabilize expectations, they noted.

Cao Heping, an economist at Peking University, told the Global Times on Saturday that the continuous pledge to build a better business environment is significant amid challenges such as the handling of chain debt cases as the economy faces mounting downward pressure.

"It is expected that government at all levels will better serve the needs of market entities and care about their needs, and roll out targeted support measures that factor in the differences of industries," Cong Yi, a professor at the Tianjin School of Administration, told the Global Times on Saturday. 

The move came as IMF officials welcomed China's efforts to improve its business environment. A Chinese official at IMF said he believed the IMF staff should study more carefully China's growth trend in its annual review of the world's second-largest economy.

Directors welcomed the [Chinese] authorities' emphasis on more sustainable drivers of quality growth and their commitment to ensuring a level playing field to attract investment, the IMF said in a statement on Friday following its 2023 Article IV Consultation.

In its World Economic Outlook released on January 30, the IMF projected that China's economy will grow by 4.6 percent in 2024, compared to its October 2023 forecast of 4.2 percent. The IMF also said China is forecast to account for nearly a third of global growth in 2023. However, it gave a medium-term projection of about 3.5 percent in 2028.

Our authorities' assessment of the recent Chinese economic developments is more positive" than the statement's claim China had experienced a "subdued recovery," Zhang Zhengxin, the IMF's executive director for China, said in the IMF's annual report.

Among the 600 surveyed foreign-invested companies, nearly 70 percent are upbeat about China's market over the next five years, and companies surveyed are increasingly satisfied with China's business environment, according to a survey by the China Council for the Promotion of International Trade, China's trade promotion agency, on China's business environment for foreign-invested companies in the fourth quarter of 2023.

Speaking at a routine press conference on Friday, Chinese Foreign Ministry spokesperson Wang Wenbin said that China embraces investment from businesses of all countries with open arms, and will continue to foster a market-oriented, law-based and world-class business environment to share with the world the new opportunities brought by Chinese modernization and pursue common development.

Separately, a recent report released by the American Chamber of Commerce indicated that half of US companies surveyed see China as the top or among the top three global destinations for investment, up by 5 percentage points compared with 2022.

Also, a survey released by the Global Times Institute on January 30 showed that 79 percent of Chinese and global business executives are very confident or confident in China's economic development in 2024.

Analysts noted that as the Chinese government continued to beef up policy support, the confidence of foreign-invested companies in China is set to continue to grow to new heights.

Cao said China's continued push toward a more open business environment, despite China already being one of leading open economies in the world, will attract foreign investors amid a chaotic global landscape in which many parts of the world are affected by military conflicts.

Foreign investors will be attracted by China's safety and steady economy, cheap assets and low inflation, Cao said. "I believe China's economic growth could reach 5 percent or even higher in 2024."

For the private sector, where a swath of small and medium-sized enterprises bore the main brunt of the industrial upgrade and economic transition, the guidance from government will help them face difficulties and beef up their confidence, leading to improved investment, Cong said.