China is one of the most rapidly developing economies in the world, and many entrepreneurs and investors are interested in doing business in this country (O’Neill 146). Still, in order to assess the political and legal environments of China for developing the business relationships, it is necessary to focus on the rankings proposed by such organizations as World Bank and Transparency International. The purpose of this paper is to evaluate the political system, the regulatory system, and the level of corruption in China in the context of doing business.
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The People’s Republic of China is ruled by the Communist Party of China that determines the character of the political ideology in the country. However, in spite of the high level of political stability in China, it is a challenging task to develop businesses there. According to the 2016 World Bank data, China was ranked only the 84th in relation to the easiness of doing business (World Bank Group par. 5).
The most promising initiatives are associated with the financial reform and the revised program regarding paying taxes. Still, there are challenges connected with registering the property and enforcing contracts that are ranked by World Bank as comparably low. According to another set of data for 2014, the level of political pressure is discussed as comparably high, with the rank of 66.35; and the associated probability of political instability is low (“The Worldwide Governance Indicators” par. 2).
While focusing on these data, it is possible to state that the level of political stability in China is high, and the economic reforms are supported, but the political pressures on companies, especially foreign ones, do not allow developing business easily in this country.
The legal system in China has the significant impact on the business development. The business environment in China is highly regulated, and recently, there were administrative and regulatory reforms that caused the nation to perceive the government’s abilities to implement effective policies and develop sound rules as average rather than low ones (the ranks are 45.19 and 42.79 accordingly) (“The Worldwide Governance Indicators” par. 3-4). The high-level regulatory initiatives are advantageous for doing businesses because of low risks and the increased legal protection (Liu 2). Nevertheless, the level of regulatory transparency is still low, and entrepreneurs face problems while developing contracts and resolving commercial disputes.
Another important indicator is the level of corruption in the country. In China, the perception of corruption for 2014 was 47.12 (“The Worldwide Governance Indicators” par. 5). Still, Transparency International noted that for 2015, the corruption rank was 83, and the associated score was 37 (Transparency International par. 4). In spite of the fact that corruption, the importance of networks, and accentuated family relations remain to be a problem in the country, they are not extremely influential (UK Foreign and Commonwealth Office par. 4). Possible decreases in these levels can be associated with the anti-corruption campaign that was started in 2014 and contributed to improving the business environments in China.
The analysis of the data indicates that China has the stable political regime and the strong regulatory system that influence the development of business in the country. These environments are most promising for the local businesses, but there can be challenges for foreign partners and investors who need to adapt to the strict regulatory systems that allow only the limited flexibility. However, as a rapidly developing economy, China demonstrates the significant progress in making the process of doing business easier.
Liu, Aviva Chengcheng. “Two Faces of Transparency: The Regulations of People’s Republic of China on Open Government Information.” International Journal of Public Administration 2.2 (2015): 1-12. Print.
O’Neill, Daniel. “Risky Business: The Political Economy of Chinese Investment in Kazakhstan.” Journal of Eurasian Studies 5.2 (2014): 145-156. Print.
The Worldwide Governance Indicators. 2015. Web.
Transparency International. Corruption by Country: China. 2015. Web.
UK Foreign and Commonwealth Office. Guidance: Overseas Business Risk – China. 2015. Web.
World Bank Group. Doing Business in China. 2016. Web.