Investment Climate - International Business

Investment climate

China's investment climate is characterized as one of the most favorable in the world, as evidenced by the growth of economic activity in the country of foreign business during the reform years. The decisive factors are (at different stages in different combinations): 1) relative political stability; 2) relatively low level of wages; 3) personal and professional qualities of Chinese workers (discipline, diligence, the desire to learn from experience); 4) the size of the Chinese market; 5) a wide range (until recently) of preferences for enterprises with foreign capital. An important role is played by the level of development of physical infrastructure (roads, ports) - infrastructure construction in the PRC has always been given great attention. To date, a network of high-speed railroads, highways, internal air transport is being developed in the country.

International ratings positively assess the level of competitiveness of the Chinese economy - this characteristic has been improving in the PRC throughout the reform period. Since the 2000's. on this parameter, the PRC occupies a higher position than other BRICS countries, and also surpasses Japan (Table 22.4). The high rating of the PRC is determined by the general dynamism of development, significant volumes of foreign economic operations, market liberalization, moderate tax burden on companies, good state of public finances and many other indicators. In 2012, it fell to two positions (23rd out of 59) as a result of increasing barriers to the penetration of foreign companies into the strategic sectors of the Chinese economy.

Table 22.4

National Economy Competitiveness Rating IMD, 2012

Country

Rating

Hong Kong

1

US

2

Switzerland

3

Singapore

4

Sweden

5

Taiwan

7

Republic of Korea

22

China

23

New Zealand

24

Japan

27

India

35

Brazil

46

Russia

48

South Africa

50

China's position is improving in another international rating - Doing Business, compiled annually by the World Bank and reflecting the favorable conditions in the country for doing business by small and medium-sized enterprises. In the 2013 ranking, China occupies the 91st place out of 185, far ahead of other BRICS countries. The lowest rating he has for positions such as business establishment (151st) and obtaining a building permit (181st). So, in order to create a company, in China it is required to undergo 13 procedures (on average for the OECD - five), and also spend 33 days (12 in the OECD) for this. The difficulty with obtaining a construction license speaks, on the one hand, of the high degree of bureaucratization of the procedure and corruption of this sphere, and also means that significant volumes of construction are carried out without obtaining a license. The rating of the People's Republic of China also worsens such characteristics as "payment of taxes" (122nd) - 388 hours are spent per year (12 in the UAE), and "investor protection" (100th place).

The level of corruption in the Chinese economy is gradually declining. According to the Corruption Perceptions Index, published annually, the PRC has a better rating than Russia and India, but is inferior to some Latin American countries, as well as to its East Asian neighbors (Figure 22.6).

Corruption Perceptions Index 2012: 0-9 - very high level of corruption, 90-100 - minimal level of corruption

Fig. 22.6. Corruption Perceptions Index (Corruption Perceptions Index 2012): 0-9 - very high level of corruption; 90-100 - the minimum level of corruption

Meditate alone

It can be seen from the above picture that the level of corruption in the PRC is higher than in many other countries of the world, in particular in Chile and Brazil, and, nevertheless, the PRC far outstrips these countries in terms of the volume of direct investments attracted to the country. What, in your opinion, are the factors of the investment climate in the PRC that are crucial for foreign investors in making investment decisions?

thematic pictures

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