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OECD economist says China’s economic reforms effective on several fronts

Updated: Dec 1,2016 9:35 AM     Xinhua

PARIS — China’s economic reforms are effective on several fronts as the reduction of cost of business and the modification of fiscal system, an economist of the Organization for Economic Cooperation and Development (OECD) said.

OECD’s indicator shows that in the past three years, the cost of starting a business has been reduced substantially in China, while the administrative procedures that the firms have to go through when registered have been eased a lot in the country, the head of China Desk of Economics Department of the OECD Margit Molnar said in a recent interview with Xinhua.

“Newly registered enterprises have been soaring these years in China, more and more people decided to set up a firm and to become entrepreneurs,” she noted.

China’s official statistics published in July this year show that about 2.62 millions of firms have been newly registered during the first six months this year in China, with a rise of 28.6 percent compared to the same period of 2015.

On the fiscal front, China’s fiscal reform “has been very successful”, Margit said, adding that China has changed its budget law in 2014, which came into effect in 2015, to allow Chinese local governments to issue bonds.

“I think that’s a crucial improvement in the managing of responsibilities between the central and local governments as well as managing debt and making debt more transparent, so on the fiscal front we have seen very substantial changes and improvements,” Margit qualified.

On the question of opening of China, Margit said that “if you just look at the initiatives China has adopted in the past year or two, you can say that China is opening, for instance the Belt and Road initiative announced in 2013, that is something that goes well beyond expectation.”

“It was not just a trade and investment type of integration that people have thought in the beginning, but it really goes into areas like intellectual property rights or environment or climate change, or collaboration in areas that people never thought such an initiative could cover,” said Margit.

“So if you look at these initiatives or the AIIB or other initiatives, you would say that these are definitely signs of further opening to reap the benefits of increased integration,” she said.

Margit also said that there was still room for further reforms in China, for example, on the reduction of cost of business, the so called one-stop shop, or single window where at a single place one can achieve all the documents, is needed for registering a company.

“So far, we’ve seen a unification of three or four license, or five ... but this is not all, we would like to see unification for all licenses,” she said.

China should also be alert to the risk of corporate debt which is not only high but also not coming down in the past two years, Margit said, noting that the implicit guarantees enjoyed by state-owned enterprises should be removed.