Since 2013, China has witnessed a marked increase in the number of registered firms, individual businesses, and farmers’ specialized cooperatives. At the end of 2013, China counted 61 million such “market entities”. Eight years later, in 2021, it had 154 million. The number of registered market entities per year increased from around 11 million to 25 million in the same period (Figure 1). This increase has happened despite a gradual slowdown in the GDP growth rates during the same period.
Figure 1: Newly registered firms and market entities in China per year, 2013-2021
This increase in the numbers of registered companies has happened along with the implementation of a large reform initiative aimed at decreasing the time and cost of starting a new business. In 2013, it used to take more than a month to start a business. Nowadays, leading cities like Beijing have made it possible to register a business within hours. A recently published World Bank paper on business registration reforms in China describes this reform process in detail.
In 2014, the Chinese government launched a national multi-year initiative to streamline administrative procedures for business registration and strengthen post-registration supervision. Its key features included:
This successful business registration reform story is the result of a combination of strategic planning and learning from local experimentation. Reforms were undertaken in stages over years, taking stock of the lessons learned though a strong monitoring and evaluation system and follow-up adjustments. Most of the reforms were initially piloted in selected cities and free trade zones before being replicated on a larger scale or across the country. This approach has proven to be very useful in tailoring good international practices to China’s own context.
