Shanghai has launched the eighth version of its action plan to improve the business environment, marking a shift from ideas to real results for investors and companies. This update was announced at the annual Business Environment Optimization Conference, held right after the Chinese New Year.
Since 2018, Shanghai has made strides in developing policies, but challenges in applying these policies remain. The city’s economy is booming, surpassing 5 trillion yuan (around US$686.81 billion) in 2024. Yet, global economic uncertainties still loom, making it crucial for Shanghai to provide a stable and clear business landscape to keep investor confidence high.
For the first time, the plan specifically emphasizes “enhancing the business experience,” signaling a move toward tangible action. This shift aims to tackle the “temperature gap” between what the government intends and what businesses actually experience. Many companies remain doubtful because they find it hard to navigate well-meaning policies that often are not executed effectively.
Traditionally, policies have been made from the top down, sometimes overlooking the everyday needs of businesses. This has led to complicated processes that make it difficult for companies to benefit from these innovations. The new plan focuses on making sure policies not only look good on paper but also work in practice.
One big change is how policies will be delivered. A recent survey showed that while there are many policies, finding and understanding them can be challenging. For instance, one policy says businesses must create “positive social benefits” to receive certain perks. However, it’s not clear what qualifies as these benefits, leaving companies unsure about how they can qualify. Another policy allows some projects to skip environmental assessments but does not clearly define the “regional ecological standards” that must be met.
To tackle these frustrations, the Shanghai government has started using big data to help businesses find out what policies they qualify for without having to search for them. This will help companies quickly see the benefits available to them.
Another issue is the online application process. Often, minor errors lead to repeated rejections, causing delays and frustration. The new plan aims to simplify this process, cut down on unnecessary information requirements, and offer personalized support for businesses applying online.
Shanghai is also working on reducing the number of overlapping inspections that disrupt business operations. More than 2,000 companies will be recognized as “authorized economic operators,” meaning they will face fewer inspections for three years if they maintain a low-risk profile. Trials for remote inspections via video monitoring are also underway to minimize disruptions.
These improvements mark a significant step toward smoother government oversight. Going forward, Shanghai plans to include credit and risk factors in regulatory inspections. This will reduce interruptions for businesses with good credit histories and low-risk status.
The biggest change comes from a shift in how the government thinks about its role. The focus is moving from what the government can provide to understanding what businesses truly need. Recognizing that businesses are the driving force behind growth and innovation is vital for creating a better environment.
For this transformation to be successful, government officials need to shift from being just policy enforcers to active partners in business development. They should engage more deeply with businesses, understand their realities, and build trust. This relationship goes beyond just fixing problems; it’s about fostering collaboration.
To facilitate this change, a new incentive system for government officials is necessary. Officials should receive ongoing training relevant to the industries they oversee. Shanghai aims to become a global innovation hub, and officials must understand the sectors they regulate to implement effective policies. Additionally, the communication structure should be streamlined, allowing front-line officials to speak directly with senior leaders on urgent issues. This quicker feedback could boost business growth and competitiveness.
Shanghai is at a pivotal point in creating a business environment that stands out on the global stage. The eighth action plan suggests a more collaborative relationship between the government and businesses, opening up new growth avenues.
By adopting a user-centric approach and empowering officials with the right tools, Shanghai can build an innovative, efficient, and globally competitive business ecosystem.
