Economic Analysis - Bureaucracy Overhaul Positive For Business Environment - MAY 2018

BMI View: The Chinese government proposed sweeping changes to the State Council and its related organisations to the National People's Congress on March 13, and we believe that reduced bureaucracy within the State Council will improve the business environment over the coming years.

We believe that the Chinese government's plans to overhaul its bureaucratic framework bode well for China's business and investment environment over the coming years. On March 13, policymakers released plans during the annual session of the National People's Congress (that will end on March 20), which will see major changes to the State Council and organisations that are related to it. Notably, the reform will see the number of ministerial level and non-ministerial agencies within the State Council reduce by eight and seven, respectively, bringing the figure to 26 (excluding the General Office). According to the ease of doing business report by the World Bank, China has improved to 78 out of 190 countries in the 2018 edition from a ranking of 93 five years ago, and this is set to improve further over the coming years.

In our view, these changes are also in line with President Xi Jinping's efforts and ambitions to overhaul the Communist Party of China to ensure that the party is able to deal with the growing economic and social challenges and therefore ensure that it is able to maintain its dominant position in Chinese politics over the coming decades.

Looking To Make Further Improvements Amid Reduced Red Tape
China - Ease Of Doing Business
Source: BMI, Bloomberg, World Bank

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