THE
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The studies are by a student who was advised to remain anonymous because of the highly critical nature of the analysis and Tianyu Ma, two Chinese natives who currently [December 2011] live in San Francisco; these studies present the Chinese government's economic policies as compared to the MIEPA list of policies as outlined above. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2005. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
CHINA - STUDENT ADVISED TO REMAIN ANONYMOUS
Comparison of China's economic policies to MIEPA criteria as prepared by a native student of China who was advised to remain anonymous, studying in the US in December 2011.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 3.0 9.0 15.0 60 %
2 2.0 6.0 15.0 40
3 1.5 4.5 15.0 30
4 3.0 9.0 15.0 60
5 4.0 12.0 15.0 80
6 3.5 10.5 15.0 70
7 3.5 10.5 15.0 70
8 3.5 10.5 15.0 70
9 4.0 12.0 15.0 80
10 4.5 13.5 15.0 90
11 4.5 13.5 15.0 90
12 3.5 7.0 10.0 70
13 5.0 10.0 10.0 100
14 4.5 9.0 10.0 90
15 3.0 6.0 10.0 60
16 2.5 5.0 10.0 50
17 1.5 3.0 10.0 30
18 2.0 4.0 10.0 40
19 2.5 5.0 10.0 50
20 4.0 8.0 10.0 80
21 3.0 6.0 10.0 60
22 3.5 7.0 10.0 70
23 1.5 3.0 10.0 30
24 1.5 3.0 10.0 30
25 1.5 3.0 10.0 30
26 4.5 9.0 10.0 90
27 4.5 9.0 10.0 90
28 2.0 4.0 10.0 40
29 4.0 4.0 5.0 80
30 2.0 2.0 5.0 40
31 4.5 4.5 5.0 90
32 1.5 1.5 5.0 30
33 3.5 3.5 5.0 70
34 4.0 4.0 5.0 80
TOTAL 107.0 231.5 365.0 64.0%
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POLICY ANALYSIS BY A STUDENT WHO WAS ADVISED TO REMAIN ANONYMOUS
INDIVIDUAL POLICIES
1. Freedom From Internal Control: 3.0
Citizens and foreigners living in China, are required to register their residence at the main police station in every district. All foreigners and immigrants, living in their non-native cities, were also required to carry an identification card. This regulation was in effect in August 2010. Foreign enterprises were checked and so were domestic corporations. Businesses were allowed to engage in activities freely only if they had “government connections”.
1) Personal
2) www.doingbusiness.org/data/exploreeconomies/china
2. Freedom of Speech: 2.0
China’s censorship is taken pretty seriously. That is the reason why google was forced to leave China. During the 2008 Bejing Olympics, there were many cases of bombings and attacks in China by Mongolians. Therefore since then, any comments regarding China were taken seriously. There were undercover policemen employed to be in public and discreetly eavesdrop on other’s conversations (it wasn’t hard because Chinese people have a habit of talking loudly.)
1) Personal 2) www.pandia.com/sew/2625-why-google-will-have-to-leave-china.html
3. Effective, Fair Police force: 1.5
The Chinese police force is neither effective nor fair. The crime rates in China are very high and fraud is among them. In China, it is easy to create a fake identity or even purchase a fake diploma from the web. They claim that crime rates are stable because major crimes are down and minor cases are mostly ignored. Police are not very effective there unless when it comes to a sum of money in their interest.
1) Personal 2) uk.reuters.com/article/2008/01/30/idUKPEK30654200801304415
4. Private Property: 3.0
In China the state owns all the land. Private properties are on a 70 years lease by the government. This means that no matter how long an owner has owned a property for, it will be returned to the government by the end of 70 years. Most find it rather irrelevant to buy a property in China. Rent is very low while purchasing prices are extremely high.
Sources: 1) personal 2) http://wiki.answers.com/Q/What_is_land_ownership_in_China
5. Commercial Banks: 4.0
China has over a hundred different banks. Over 20 banks are domestic while the rest are international banks. Banks are known to loan huge sums in the past, as the government supports entrepreneurs starting their own business. This will help create more jobs. Currently, China will be tightening their measures for loans due to the inflation crisis. The loans from banks in China have risen to hundreds of billions until today and yet some are not paid back. Many loans are “disguised loans” and analysts are already showing concern. Therefore, loans are harder to acquire today.
1) Personal 2) http://online.wsj.com/article/SB10001424052970204224604577027520439439992.html?mod=googlenews_wsj 3) http://en.wikipedia.org/wiki/List_of_banks_in_the_People%27s_Republic_of_China 4) http://www.ibisworld.com.cn/industry/default.aspx?indid=946 5) http://www.nytimes.com/2010/07/15/business/global/15yuan.html
6. Communication Systems: 3.5
The use of computers and mobile phones is really famous in China. There are over 30 telecommunication companies. Many people were looking forward to 3G phones and network to enable faster data transmission and more. These phones are mainly used by businessmen and young teenagers, who desire access to videos on the internet through their phones. Most teenagers nowadays find the internet essential to their lives as there is constant engagement in online chat rooms more than the personal approach. However, internet-speed in China is easily disrupted and many foreign sites are blocked due to the censorship policy in China. Communication within the mainland is very efficient while international communication is actually very limited.
Sources: 1) Personal 2) http://infoseekchina.com/Industries/telecommunications.html 3) http://www.chinadaily.com.cn/business/2009-01/08/content_7376941.htm
7. Transportation: 3.5
Transportation is very efficient in China although the quality of it may not be. Cab fares are extremely low compared to any other western countries. But prices are slowly rising due to the rise in fuel prices. China has 14 different metro lines available for travel within cities. This excludes the railway trains and maglev, which will take you from one city to another. Buses however, are unsafe and unhygienic, even when compared to other forms of transportations.
1) Personal 2) http://www.urbanrail.net/as/shan/shanghai.htm
8. Education: 3.5
China has many local and international (private schools). For international schools, the material taught is mostly similar to the USA but with an extra subject, Chinese, taught by local teachers. The local education system enforces memorization among the students. The students are monitored closely in their progress with their homework and exams. No awards are offered in extra-curricular activities other than ping-pong and badminton. Show of extraordinary skill in these sports will automatically put the student in a program for training at a professional level while maintaining their education level. This means that their daily habits and lifestyle will be controlled. China does give students the choice to continue education but does not give the choice in major. For example, if a student excels in a particular subject in the “Gao Kao” (similar to our SATs), they will be automatically be put in a University by the government. Students are not allowed to choose their major and college.
1) Personal 2) http://www.edu.cn/20041203/3123354.shtml
9. Social Mobility: 4.0
Social mobility in China has significantly improved since the 1978 post economic reforms. The literacy rate impressively high for a country which traditionally relied on farming to bring in wealth. China’s literacy rate today is 91.6% of the total population. Expenditures on education is up to 1.9% of GDP. As for those who could not afford to go to school, many of them turned out to become owners of business firms, plantations and farms. Just last week I met someone from China, here in San Francisco. He is from one of the most rural areas in China and it turns out he owns a chicken farm and is waiting to do business with KFC here.
Sources: 1) Personal 2) www.photius.com/countries/china/geography/china_geography_social_mobility.html 3) www.china-mike.com/facts-about-china/facts-chinese-education/
10. Freedom from Outside Control: 4.5
China is an independent country. It does not face threats from any other country. Chinese citizens around the world are only under China’s jurisdictions. Military spending is up to 12.7% of GDP this year. China is focusing on becoming one of the world’s strongest nations. A lot of spending is however said to be off the records.
1) Personal 2) www.bbc.co.uk/news/business-12631357
11. Foreign Currency Transactions: 4.5
The import and export business exchange currencies in either USD or RMB. Only certain worldwide currencies can be exchanged in China, other than that they use the RMB.
Sources: 1) Personal 2) www.chinability.com/Reserves.htm
12. Border Control: 3.5
China has a strict border control. Every foreigner that comes into China must have a visa. There are also drug smuggling issues in China from Southeast Asia or other neighboring countries.
Sources: 1) Personal
13. Currency: 5.0
Only RMB or Chinese yuan, is recognized as the official currency. Other currencies must be converted in the banks first before anything else.
Sources: 1) Personal
14. Cultural, language homogeneity: 4.5
The ethnic make up of China consists of Mostly Han- Chinese (91.9%) and other ethnicities make up the remaining 8.1%. They consist of Zhuang, Uygur, Hui, Yi, Tibetan, Miao, Manchu, Mongol, Buyi, Korean and other nationalities. Almost everyone is concerned about “face” or we say “Mian zi”. This word directly translates as honor, respect and reputation. There are between seven and thirteen main Chinese dialects and sub dialects spoken the mainland. The main language spoken is Mandarin. It is taught in all schools and used to teach the students in the schools.
Sources: 1) Personal 2) http://en.wikipedia.org/wiki/Chinese_language 3) http://www.kwintessential.co.uk/resources/global-etiquette/china-country-profile.html
15. Political Effectiveness: 3.0
Political effectiveness is actually not very effective compared to the United States. Barely anyone bothers to call the police and they be easily bribed. Although there are examples of the politics being effective such as the Sichuan earthquake and severing the sentence on drug trafficking, they failed to protect the people from attacks. Road laws are not enforced and thus there is a high rate of accidents in China with the way they drive. I believe the government is even less confident than outside observers regarding their nation’s political stability.
Sources: 1) Personal 2) http://asiafoundation.org/in-asia/2011/05/04/china-political-stability-amid-jasmine-revolutions/ 3) http://www.businessweek.com/news/2011-07-19/china-s-police-shoot-xinjiang-rioters-as-xi-warns-on-tibet.html 4) http://www.guardian.co.uk/world/2008/aug/10/china.olympics20081
16. Institutional Stability: 2.5
Corruption still plays a huge role in China. They believe that profit comes first and mostly for personal reasons. At first it was only the Chinese Communist Party who took control in 1949. Later the other branches such as the Judicial Branch came into power in 1980.
Sources: 1) Personal 2) http://books.google.com/books?id=Lq2YAdMWbGcC&pg=PA198&lpg=PA198&dq=china%27s+institutional+stability&source=bl&ots=yVgmRhy9No&sig=FtFDxMHM8kTlCVM154PANW82o34&hl=en&ei=vMSCTob_HrPSiAKn8a2kDQ&sa=X&oi=book_result&ct=result&resnum=3&ved=0CD4Q6AEwAg#v=onepage&q=china%27s%20institutional%20stability&f=false 3) www.koreanhistoryproject.org/Jta/Ch/ChGOV0.htm
17. Honest Government: 1.5
There are many cases known to justify corruption among government officials. A friend of mine here owned a web design company in China years ago. He told me that once the company had opened, profit was amazing and that’s when the officials paid him a visit. They asked him to increase the price by ten fold and give them 90% of the profit. Policies and laws are not solid or stable in China, therefore everything is negotiable. The CPI ratings of China is 3.5 this year. This looks bad compared to the United States and Canada. 106,000 officials were prosecuted for corruption in 2009 which was a 2.5% increase from 2008. With China’s growing economy, it will only get worse.
Sources: 1) Personal 2) http://www.transparency.org/policy_research/surveys_indices/cpi/2010/results 3) http://news.bbc.co.uk/2/hi/8448059.stm
18. Common Laws: 2.0
China does not have solid common laws, anyone of any stature could be bribed and there is always unfair treatment depending on your value or stature in society.
Sources: 1) Personal
19. Central Bank: 2.5
Inflation continues to spike as China’s central bank raised interest rates in order to minimize the acceleration of inflation. They consider this to be the top priority. China is still fresh from its increased rates for nearly four years. Price trends differences are “relatively large”. The People’s Bank of China claim they will “continue to guide monetary conditions gradually back to a normal level.”
Sources: 1) http://ca.news.yahoo.com/chinas-central-bank-says-cooling-inflation-still-top-040444666.html 2) http://online.wsj.com/article/SB10001424052748703778304575590093875291612.html
20. Domestic Budget Management: 4.0
China has developed the first domestic budget management software on March 20, 2011. It appears that expenditure has multiplied by 22.5 times since 1991. Their revenue is at an average rate of 15%. This is higher than the GDP increase since 1991. Their revenue are due to taxes of consumption, corporate income, personal income and imports, exceeds their expenditure by the hundred billions. In 2010, they expected to limit the deficit to less than 3% of the expected GDP, while the economy is expected to grow 8%. Their deficit is, specifically, 2.8% of GDP. They have recently posted a fiscal surplus of 193.3 billion dollars this is equal to 6.1% of China’s GDP. National fiscal revenues in june rose to 1.01 trillion yuan. This is equal to a 28 percent increase.
Sources: 1) http://www.starmass.com/china_review/government_finance/government_finance_trends.htm 2) http://www.chinastudygroup.org/2010-overall-budget-management-software-market-research-report-released.html 3) http://www.oecd.org/document/5/0,3746,en_2649_34111_36157765_1_1_1_1,00.html 4) http://www.marketwatch.com/story/china-expects-this-years-deficit-at-28-of-gdp-2010-03-05 5) www.reuters.com/article/2011/07/14/us-china-economy-revenues-idUSTRE76D0YF20110714
21. Government Debt: 3.0
China’s foreign debt increases this year and is amounted to USD 642.5 billion. This is a significant increase since 2008. The local debt has worsened as well. The amount was said to be understated; at 17% to GDP. It turns out that the total amount is near 89% to GDP.
Sources: 1) http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20110918000031&cid=1102 2) http://www.foxbusiness.com/markets/2011/08/07/chinas-debt-problem-worse-than-portugal-1014895568/
22. Economic Statistics: 3.5
China’s economy seems to be doing well. It is ranked the second largest in 2010, the largest exporter of goods and the second largest importer. The economy has a consistent growth rate of approximately 10% over the past 30 years. However, there are still hundred millions of people living on less than USD1.25 a day. Infant mortality rates and maternal mortality rates continue to decrease. Now, China has a population of 1.37 billion. 1.17 billion are phone users, 900 million mobile phone users, 457 million internet users, 370 million TV households, 189 billionaires with the average of USD 15 million out of every 300 people in Shanghai. The biggest market for car ownerships are still by the corporate companies. There are 6 car owners out of every 100 people and the rates of purchase are still increasing. About 95.8% of families own houses in China and a shocking amount under the age of 30.
1) http://www.theodora.com/wfbcurrent/china/china_economy.html 2) http://en.wikipedia.org/wiki/Economy_of_the_People's_Republic_of_China 3) http://english.peopledaily.com.cn/90001/90776/90882/6554686.html 4) http://www.chinatoday.com/data/data.htm 5) http://news.bbc.co.uk/2/hi/business/6658583.stm 6) http://www.chinahush.com/2009/12/05/young-people-should-not-be-able-to-afford-houses/
23. Protection of Public Health and Safety: 1.5
China is severely polluted. Middle class and wealthy locals prefer to go to international hospitals rather than local hospitals due to the cleanliness. There several massive attacks and riots in China. There were attacks from Mongolia during the Olympic season, riots in Xinjiang and other school attacks. The infant mortality rates are gradually decreasing, which looks good but however, the birth rate has shown decrease as well.
Sources: 1) Personal 2) http://www.chinahighlights.com/travelguide/public-health.htm 3) http://www.chinese-culture.net/html/china_public_safety.html 4) http://en.wikipedia.org/wiki/2010_Chinese_school_attacks 5) http://www.businessweek.com/news/2011-07-19/china-s-police-shoot-xinjiang-rioters-as-xi-warns-on-tibet.html 6) http://www.guardian.co.uk/world/2008/aug/10/china.olympics20081 7) http://www.indexmundi.com/g/g.aspx?v=25&c=ch&l=en
24. High Wage Policies: 1.5
Although the global concept of China’s “ Cheap Labor “ is slowly vanishing, wages over there are still barely reasonable. It does depends on which city you live in which determines the term “ High Wage”. For example if you live in the Guangdong province, most of the cities living expenses would be considered low. With that being said many people would be able to live comfortably on CNY 5000 on a monthly basis. On the other hand, if you live in a city such as Shanghai, the very same CNY 5000 would not mean anything. It can be easily spent on rent and bills. The wages in Shanghai for the local workers are not considered high. It is the Expats who receive a higher income.
Sources: 1) Personal 2) http://english.people.com.cn/90001/90776/90882/6489568.html
25. Environmental Protection: 1.5
Severe pollution is inevitable when a country has a booming economy. Most of the locals there do not bother with the polluted environment as well. The city streets are full of litter, cigarette buds and spit. Nitrogen Dioxide levels have risen 50% since 1996. China’s land is huge but that does not mean most of it is fertile. It is because of this reason, most people move to the cities and other fertile areas. This causes a huge population density in certain regions. There is also the issue of acid rain, which damages buildings and crops throughout the country. Last but not least there is the issue where over 600 million people live in water stressed provinces due to water scarcity.
Sources: 1) Personal 2) http://www.nytimes.com/interactive/2007/08/26/world/asia/20070826_CHINA_GRAPHIC.html
26. Strong Army: 4.5
Another one of China’s top priority, apart from generating as much wealth as possible, is to protect their nation and territories. The ground forces itself are strong as it has over 2.5 million men and counting. Tanks and artilleries in the high ten thousands and more than 400 helicopters. In addition to all this, they have an arsenal of 400 nuclear warheads, which are divided among the various divisions. The air is ruled by the 4,350 aircrafts while the sea by nuclear powered submarines.
Sources: 1) Personal 2) http://www.comw.org/cmp/fulltext/iddschina.html
27. Foreign Trade Impact: 4.5
For a long time, China’s main source of revenue was through exporting and manufacturing goods. As soon as China took the first step in it’s opening up endeavor, progress has been rapid over past 30 years. Their revenue has been in the high hundreds billions. China is the second largest recipient of foreign investments in the world. Although it may seem that their market will crash when the foreign market does, their current investments will be able to support the country. For example, China’s investments in Africa is said to increase to USD 50 billion by 2015. The GDP annual growth rate is expected to be 9.5% in this decade. While the trade revenues to GDP is 13%. With that being said rather than stating that their economy will suffer in if the foreign markets crash, I would say that their economy would change in the future. They would no longer depend on exports as their main income.
Sources: 1) Personal 2) http://www.chinaconsulatechicago.org/eng/sw/t31991.htm 3) http://www.bloomberg.com/news/2011-02-22/china-s-investment-in-africa-to-increase-to-50-billion-by-2015-bank-says.htm 4) http://www.china-mike.com/facts-about-china/economy-investment-business-statistics/
28. Protection of Foreign Currency Earning Enterprises: 2.0
Speaking to many entrepreneurs who manufacture their goods in China for export or setting up a representative office, they feel that China has given them a good deal. The law for a representative office is that they would only be able to manufacture, or buy goods in China to sell overseas and offering a tax return up to 13%, but doing business in China is not allowed. This is a good deal for a short-term period. However, they may lose out on profits in the long run as consumers in China are increasingly demanding foreign products. Here we can see that it is actually not a good deal at all.
People who would like to do business in and out of China while setting up a company there can do one of two things. First choice is to set up a WOFE (Wholly Owned Foreign Enterprise). They would need to lock USD 150,000 in a Chinese account, pay higher taxes, only allowed to rent grade A offices and have limitations to employing foreigners. The second choice would be to find a local partner to set up a “Chinese Company”. There are huge benefits in opening up one. There will be lower taxes, offices can be registered anywhere, less government inspection and last but not least less limitations in hiring foreigners. The disadvantages are that the shares will not be owned under you and your partner has rights in the company, therefore having access to all the capital. Since the laws and policies are still not fixed, the Chinese government is set out to protect their domestic industries and their own people.
Sources 1) Personal 2) http://www.chinavista.com/invest/policy.html 3) http://www.china-customs.com/customs-tax/
29. Management of Foreign Currency Budget: 4.0
There was a trade deficit in the late 90s but that was only momentary. China’s trade still remain in a surplus in the hundreds billion dollars.
Sources: 1) http://www.nxyanlong.com/view.asp?id=149 2) http://news.sohu.com/20090123/n261926315.shtml
30. Layers of Collective Action: 2.0
Due to the enormous population, the voting system is only public to a mayor’s level. Government offices do not take criticism very well. They see it as a “loss of face” and mainland Chinese love “face” no matter their age, gender or stature The process of running to the multi-layers of government branches are still endless hassles. Faults do exist and are in the obvious but improvements are significant as well. Policies are slowly becoming solid but corruption exists in the various layers of government. Votes of any ranks higher than the mayor is still not open to the public as there are complications with the enormously large population.
Sources:
1) Personal 2) http://digital.library.adelaide.edu.au/dspace/handle/2440/48404
31. Pro-Business Climate: 4.5
Many foreigners and locals who has been exposed to foreign cultures would say that this is the only reason for going or returning to China. Chinese have always thought highly of entrepreneurs. They realize that the existence of more companies would create more job opportunities, reduce unemployment rates, prosper China’s wealth and bring in tax revenue. In order to successfully promote this, China’s banks offers loans at low interest rates, lower taxes etc.
Sources: 1) Personal 2) http://www.atimes.com/atimes/China_Business/LJ21Cb01.html 3) http://dangan.jianghai.gov.cn/Article_Show.asp?ArticleID=9390
32. Government Enterprises: 1.5
Most enterprises in China are mostly private owned now; ever since they intensified their reforms of government enterprises and the policy to open up. China believes that the non-state-owned economy is a very good supplement to the state-owned economy. China’s private firms account for about 75 to 80% of profit in Chinese industry; 90% in non-financial services.
Sources 1) http://www.cctv.com/lm/124/31/70782.html 2) http://www.gov.cn/gzdt/2008-01/23/content_866971.htm 3) http://www.china-mike.com/facts-about-china/economy-investment-business-statistics/
33. International Security Agreements: 3.5
China has come a long way to building up it’s country and economy. At the moment there are no obvious threats from any other country. The unfair treatment of foreigners within China may result in conflict in future.
Sources: 1) Personal 2) http://www.irchina.org/en/news/view.asp?id=317
34. Protection of Domestic Enterprises from Government Mandated Costs: 4.0
The Chinese domestic enterprises are to comply with all the labor laws. However, China’s commercial laws are very relaxed. Tax rates for domestic enterprises are lower compared to foreign enterprises.
Sources: 1) Personal
CHINA - TIANYU MA
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
China - Tianyu Ma
Comparison of China's economic policies to MIEPA criteria as prepared by Tianyu Ma, studying in the US in December 2011.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 4.0 12.0 15.0 80 %
2 3.0 9.0 15.0 60
3 2.9 8.7 15.0 58
4 4.2 12.6 15.0 84
5 4.8 14.4 15.0 96
6 4.2 12.6 15.0 84
7 3.7 11.1 15.0 74
8 4.1 12.3 15.0 82
9 3.9 11.7 15.0 78
10 5.0 15.0 15.0 100
11 4.0 12.0 15.0 80
12 5.0 10.0 10.0 100
13 4.2 8.4 10.0 84
14 5.0 10.0 10.0 100
15 4.6 9.2 10.0 92
16 4.7 9.4 10.0 94
17 4.8 9.6 10.0 96
18 1.8 3.6 10.0 36
19 2.9 5.8 10.0 58
20 3.5 7.0 10.0 70
21 3.5 7.0 10.0 70
22 4.3 8.6 10.0 86
23 3.1 6.2 10.0 62
24 1.5 3.0 10.0 30
25 2.5 5.0 10.0 50
26 3.5 7.0 10.0 70
27 4.9 9.8 10.0 98
28 2.2 5.0 10.0 50
29 3.8 3.8 5.0 76
30 1.5 1.5 5.0 30
31 4.5 4.5 5.0 90
32 4.0 4.0 5.0 80
33 4.8 4.8 5.0 960
34 4.0 4.0 5.0 80
TOTAL 128.3 278.6 365.0 77.0%
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POLICY ANALYSIS BY TIANYU MA
INDIVIDUAL POLICIES
In China, citizens are free to move from one place to another either within one state or cross states. However, citizens who want to make this move and to benefit from the policies in that state, they need to apply for local citizenship of the destination state. People are welcome to start or expand business anywhere within the nation as long as it follows rules. This creates a good condition for businesses because they move around all the time.
Source: Personal experience; http://www.china.com.cn/chinese/zhuanti/253189.htm; http://zhidao.baidu.com/question/259513247.html?fr=qrl&cid=159&index=1
2. Freedom of Speech: 3.0
It is a misunderstanding that Chinese do not have freedom of speech. Chinese government do take actions and restrict some aggressive speech that harms the reputation of the nation. However, speech is a topic that is connect more with politics. Due to Chinese lack of enthusiastic in this field and its internal culture, citizens are not very active in giving speeches. Therefore freedom of speech is not contributing to businesses that much though citizens are becoming more aware of their right of speech.
Source: Personal experience; http://club.china.com/data/thread/1011/2443/19/01/6_1.html; http://blog.sina.com.cn/s/blog_58e2df5501009j4f.html
3. Effective, Fair Police Force: 2.9
Overall speaking, policy force in China is decent. However, when it comes to solving individual case like burglarize, robbing, or murder, efficiency is slow. This boils down to the fact that China’s large amount of population. The ratio of police force and population is 0.13% whereas in the U.S this number is 0.25%, which is twice as higher. Therefore, China still has long way to go in both limiting its population and increases its police force.
Source: Personal experience; http://bbs.tongcheng.gov.cn/forum_view.php?fid=741030&tid=1; http://www.12edu.cn/zuowen/dybg/200901/234139_2.shtml; http://bbs.tiexue.net/post_3562800_1.html
4. Private property: 4.2
China is very serious about protecting its citizens’ properties. It is essential that a nation protects its domestic goods. Citizens in China are free to keep, use, exchange the ownership or sell their properties as long as it legal. This protection facilitates citizens being more active and holding positive perspective of the value of their properties, and therefor, enriching businesses. However, it is very hard for China to protect properties that are not physical real, for example, a digital copy of a software. There are many cracked software for people to download free of charge. China ought to work on this issue and protect citizens’ possessions in any way possible.
Source: Personal experience; http://forum.book.sina.com.cn/viewthread.php?tid=3749672&page=1#pid29911278; http://hi.baidu.com/%CA%CD%BE%F5%D0%DE/blog/item/fe44601dd06a306df624e413.html
5. Commercial Banks: 4.8
Currently in China, there are 16 core commercial banks and around 100 sub commercial banks. They are spread out in China; this provides good opportunities for companies to borrow money to expand their businesses. These commercial banks lend money to enterprises and these money mostly come from citizens’ deposits. About half of the total went to medium and small size companies. This implies that commercial banks pay more attention to potential growth. Therefore, then commercial banks in China are sound and health. In addition, Commercial banks in China perform well in limiting businesses’ activities in financial, and non-business activities.
Source: http://news.xinhuanet.com/theory/2008-04/23/content_8033716.htm; http://www.studa.net/bank/100105/11123236.html
6. Communication Systems: 4.2
In the year of 2009, 3G second and third phase construction has been completed. The coverage of 3G network in China has extended to 328 cities and the coverage rate is over 70%. Even though the coverage in the west of the country is not as good as the east, it does not affect very much because the population is located imbalanced, which is more population are in the east part of China. Communication system in China has been increasing very fast in the past 10 years under the boost of the internet.
However, due to large amount number in population, China still need sometime to catch up with industrialized countries so that more individuals can experience the convenience of telecommunication.
Source: http://pda.c114.net/32/c2806.html; http://www.ccidcom.com/html/yunyingshang/201003/18-100484.html
7. Transportation: 3.7
China now has total of 3.984 million kilometers highway with the invest of 734.3 billion in U.S. dollar. Underground railways of total 602.3 kilometers are located in 12 major cities. China will have 60% coverage of freeway throughout the whole nation. Besides the road way, China has great railroad and flight coverage throughout the nation and this serves the majority of the population, therefor facilitating enterprises to boost their business, and increase the economy in China as a whole.
Source: http://news.qq.com/a/20110119/000218.htm; http://www.baiinfo.com/article/benfenbintong/1077/5773993.html; http://auto.sohu.com/20110719/n313843814_3.shtml
8. Education: 4.1
According national study, up u5till the year of 2010, the illiteracy in China has been decreased to 8.72% from 22.23% a decades ago. Comparing this percentage to the U.S. illiteracy, which is about 14%, China performs well. However, due to large number in its population, total number of illiteracy in China is much more than the U.S. The total number of graduates from colleges and universities in 2004 was 2.8 million, which is 25% of the total high school graduate. Number of Students in Colleges and Universities is 4.13 million, which is about 33% of the total young adult population. Overall speaking, the quality and quantity of education in China is optimistic, and this plant seeds for more job creation in the future.
Source: Personal experience; http://www.gov.cn/jrzg/2009-07/08/content_1360365.htm; http://zhidao.baidu.com/question/201742964.html; http://tieba.baidu.com/f?kz=669272335
9. Social Mobility: 3.9
Nepotism is still common in China, especially some small towns and rural areas where people heavily rely on their relationships within their family members. However, on the larger scale of the whole business field, this situation becomes less considered because the very first thing that a enterpriser ponder is profit. With the blooming economic since the early mid 80’s and early 90’s, entrepreneurship have grown rapidly. This creates a very good environment for businesses to grow and less people drop out of schools as their family finical condition becomes better. Many people born in last century around 60’s and 70’s are now mostly have their own business and are performing well.
Source: Personal experience; http://baike.baidu.com/view/48598.htm; http://zhidao.baidu.com/question/120378588.html
10. Freedom from Outside Control: 5.0
There is no doubt that Chinese people do not threatened by any of other countries any ways. Citizens in China are only subject to the law of only China. As mentioned early, China does spend a lot on its army, which contributes to this policy. People in China are protected by the government and it is not very likely that this could cause problems. Therefore, freedom from outside control make a great contribution to the business market in domestic.
Source: Personal experience; http://news.xinhuanet.com/english/2009-01/16/content_10667910.htm; http://news.sina.com.cn/c/2009-12-25/025319333079.shtml
11. Protection of Domestic Enterprises: 4.0
According to Ministry of Commerce of the People’s Republic of China Comprehensive Department, the export in July, 2011 is $1049.38 billions and the import is $973.17 billions. Even though the export is slightly more than import, overall speaking, the two are relatively balanced, and the economy has been growing in a very optimistic path. Chinese government has very detailed plan for its domestic businesses and have established well-designed system for it to develop.
Source: http://tech.sina.com.cn/e/2011-09-26/08136110814.shtml; http://zhs.mofcom.gov.cn/aarticle/aa/201108/20110807689737.html
12. Foreign Currency Transactions: 5.0
It is definite to say only Chinese Yuan is allowed among Chinese domestic businesses. However, it is very likely that for people who make international transactions use USD since it is the world currency. This is the only exception.
Source: Personal experience; http://www.bloomberg.com/news/2011-10-09/best-forecasters-see-yuan-to-advance-boosting-dim-sum-bonds-china-credit.html; http://www.asia-planet.net/china/currency.htm
13. Border Control: 4.2
Due to China’s large dominion, its fast growing pace, and potential market, smugglers take advantage of every possible way to sneak good in and out of the country. Chinese border control puts very strict examination of the importing and exporting goods. In addition, strengthening border control with other countries now becomes one of the most efficient ways to fight against this situation because nations unite together to protect its domestic profit.
Source: http://www.strategypage.com/on_point/20100817231128.aspx; http://tucson10.nytimes-institute.com/2010/01/06/human-smuggling-of-chinese-across-u-s-mexico-border-surges/
14. Currency: 5.0
The official currency in China is CNY(Chinese Yuan). It is only allowed to exchange foreign currency in CYN in order to make business transactions. There is absolutely no ambiguity in this field.
Source: Personal experience; http://nf.nfdaily.cn/nfdsb/content/2011-10/10/content_31123838.htm
15. Cultural, language homogeneity: 4.6
China is a nation that contains 56 ethical groups. And there are very rich cultures among these various groups. They do not contradict to each other even though Han ethical group makes up the largest population. In fact, under the guidance of the Chinese government, 56 ethical groups share the same will, value, and love. This creates a harmony that the whole nation strives for one goal.
Source: Personal experience; http://www.360doc.com/content/08/1122/13/80095_1977481.shtml http://www.qstheory.cn/tbzt/mztjjytxdb/mztjdb/200909/t20090910_11247.htm; http://cpc.people.com.cn/GB/66888/77791/9736138.html
16. Political Effectiveness: 4.7
In the year of 2008, a huge disastrous earthquake hit WenChuan, Sichuan province. Chinese government responded very soon and minimizes the hurt of the subsequent consequences to the local citizen. Emergency plans were made appropriately and executed in time. The recovery of the earthquake is decent and the government performed well on this natural disaster.
Source: Personal experience; http://www.gdemo.gov.cn/zt/ydtl/llyj/201006/t20100607_122305.htm; http://www.lawtime.cn/info/shengchan/sgjy/201105305644.html; http://www.aqtd.cn/aqscjc/html/31537.html
17. Institutional Stability: 4.8
After the foundation of China in 1949, Chinese government has been establishing laws and perfecting regulations for many institutions such as courts, schools, hospitals, banks, businesses, etc.. And these institutions and organizations have been stable over the past decades. So, it is safe to say that Chinese government creates the stability for its businesses.
Source: Personal experience; http://course.cug.edu.cn/cugthird/common_policy/pages/1.2.1b.htm; http://wuxizazhi.cnki.net/Article/ZKWM200411002.html
18. Honest Government: 1.8
Corrupted individuals and government officials are growing, and this creates a very bad reputation among the domestic and this tends to become a unfavorable circulation. Even though Chinese government acts tough on these issues, it is still a long way for China to catch up with other nations like Canada, the U.S. and Australia in terms of Corruption Perceptions Index 2006 according to The Transparency International Corruption Perception Index.
Source: Personal experience; http://www.transparency.org/policy_research/surveys_indices/cpi/2006; http://www.zjzfcg.gov.cn/new/llsw/250167.html
19. Common Laws: 2.9
Due to China’s lopsided development across the whole nation and its civil law system, Chinese government constitutes different policies based on the economic division in China. Therefore, people in the west probably receive different policies and deals than those in the east in which the economy is much better. However, the government is trying to balance the both, it is still a long way to go to get the desire of starting a business for all citizens to be similarly equal.
Source: Personal experience; http://en.wikipedia.org/wiki/Common_law; http://en.wikipedia.org/wiki/Civil_law_(legal_system)
20. Central Bank: 3.5
During the global economic crisis, Chinese Central Bank has made appropriate adjustment to minimize the harm by this wave. The currency to $1 in Chinese Yuan is 6.4716, which has gone up 2.33%. This decreases the export, thereby boosting domestic job creation. Over all speaking, the Central Bank’s performance is decent.
Source: http://www.dss.gov.cn/Article_Print.asp?ArticleID=219464; http://money.163.com/11/0812/16/7B95AEKQ00253B0H.html; http://online.wsj.com/article/SB10001424052970204422404576594490222289126.html
21. Domestic Budget Management: 3.5
In the year of 2010, China’s total expenditure was $139.2 billions as compared to its revenue, which was $129.95 billions. This indicates Chinese government allocates a balanced budget for the whole nation.
Source: Personal experience; http://wenwen.soso.com/z/q299875006.htm; http://www.chinaacc.com/new/253_268_201101/02xi1288154140.shtml
22. Government Debt: 4.3
Chinese government manages its debt well in terms of percentage of the debt divided by GDP, which is 443.2 billion U.S. dollar, roughly about 10%. This puts the government debt in a good standing even though China ranks high in total foreign debt. This mainly boils down to the fact that China’s GDP is so vast that can balance the debt to the level that is health for the nations’ economy.
Source: http://cqhkf.blog.163.com/blog/static/4454975620106492510318/; http://www.ibtimes.com.cn/articles/20100705/zhongguo-waizhaiyue_all.htm
23. Economic Statistics: 3.1
Under fast development of the Internet and economy globalization, the awareness and the attention of Chinese citizens of the economy is growing faster. As a result, more and more economic statistics are being published through the Internet, newspaper, and many other medias. People now have easier access to the pulse of economy in China. These statistics tend to become more accurate and reliable.
Source: http://www.ce.cn/xwzx/gnsz/gdxw/201103/15/t20110315_22300059.shtml; http://www.21cbh.com/HTML/2011-6-14/5NMDAwMDI0NDI5NA.html; http://news.iresearch.cn/viewpoints/132400.shtml
24. Protection of Public Health and Safety: 1.5
A recent serious scandal case in China’s dairy farming, known as “Poisonous Milk Powder”, has drawn a huge attention from the world. Such severe mistake results a very bad reputation for China among the world. In the year of 2002, infant mortality in China is around 29%, which is much higher as compared developed countries like the Unites States, Japan, and Western Europe.
According to WHO, every year in China more than 130,000 die from this treatable disease tuberculosis, nearly 10th of the world's total.
Source: http://www.china.org.cn/health/2007-03/21/content_1203649.htm; http://www.phac-aspc.gc.ca/tbpc-latb/itir-eng.php; http://www.lhslrk.gov.cn/html/lilunyanjiu/367.html; http://www.un.org/apps/news/story.asp?NewsID=11514&Cr=; http://www.cpdrc.org.cn/tjsj/tjsj_cy_detail.asp?id=3227
25. High Wage Policies: 2.5
Obviously, China is fall behind in this policy due to its large population and low average education. Income for an individual in China is good enough to make a living. However, it is still far behind many countries in terms of the quality of one’s living.
Source: Personal experience; http://zhidao.baidu.com/question/30861857; http://www.truevue.org/shanghai/shouru-shuishou; http://wenda.tianya.cn/wenda/thread?tid=7aae5105b885bf5b
26. Environmental Protection: 3.5 Though China is developing fast in past few decades, government still pays less attention to environment protection. Many companies are not regulated by the local government in terms of protecting environment. This creates less business opportunities and drags local economy as a whole.
Source: Personal experience; http://www.chinaenvironment.com/; http://www.zhb.gov.cn/
27. Strong Army: 4.9
This is no long a concern for almost all of the businesses in China. The global environment is, to a certain extent, in pace. The stable and safe situation in China creates a good environment that enables businesses to grow healthier and faster.
Source: Personal experience; http://www.mod.gov.cn/; http://news.xinhuanet.com/ziliao/2004-07/20/content_1618295.htm
28. Foreign Trade Impact: 2.5
After China joined WTO, the global economy has been gradually going into China, this contributes more than half of China’s total GDP, which is around 60%. China is heavily depending on international trade, which is not a good sign for one’s economy.
Source: http://wenwen.soso.com/z/q115629662.htm; http://www.stats.gov.cn/tjshujia/dysj/t20110323_402713180.htm
29. Management of Foreign Currency Budget: 3.8
In the year 2010, China’s export was $15779, and the import was $13948, China has a trade surplus 1831 billion.
Source: http://money.163.com/11/0120/10/6QR6PU0I00254L6F.html
30. Layers of Collective Action: 1.5
China has a vast amount of population. This is a drawback when it comes to collective actions. Due to the lack of a well-developed system for election, it is very hard, to a certain extent almost impossible, to let 1.3 billion people vote for their ideal representations and candidates. As a result, people get used to it and are not active about it even though they have strong wish to get involved. However, the P.R.China Congress is trying to rise the criteria for candidates to be elected. During these years, the government of China is showing their efforts towards this issues by showing election vitrification so that people actually see what is going on during the election process.
Source: Personal experience; http://kbs.cnki.net/forums/13126/ShowThread.aspx; http://www.360doc.com/content/11/0622/06/19446_128608594.shtml
31. Pro-business Climate: 4.5
One of the most important reasons why China has taken off in terms of economy during recent decades is that more and more people started to realize that being entrepreneurs can really come true one’s fulfillment and have better life. This prosperous increase implies that the government in China has really opened its mind to all people. People’s social status will be changed if one becomes a successful entrepreneur. Therefor, the climate for businesses is very positive in both short-term and long-term look.
Source: Personal experience; http://www.gov.cn/jrzg/2008-01/07/content_851661.htm; http://www.sunbus.cn/static/a15159ff2fd3.html; http://wenku.baidu.com/view/f229bb858762caaedd33d4a0.html
32. Government Enterprises: 4.0
Along with entering WTO, China has opened the door not only to the world, but also to the domestic enterprises. This decrease the chance of letting the government control enterprises. Instead, people get more chances of opening and running businesses. Therefor, the GDP of government enterprises in whole GDP has been decreasing by one third over the past 3 decades.
Source: http://conference.caijing.com.cn/2009-12-18/110339698.html; http://wenda.tianya.cn/wenda/thread?tid=6e95b317e870e8a7&hl=zh-CN%3Flid%3Ftid%3Flid
33. International Security Agreements: 4.8
Apparently China is now a big nation with strong military force and need not to worry about international threat. This create a good environment for businesses.
Source: Personal experience; http://www.chinaiiss.com/military/view/18
34. Protection of Domestic Enterprises from Government Mandated Costs: 4.0
In China, domestic enterprises have to obey the laws for its specific business area. However, due to the fact that the laws are not perfect, it is easy for some domestic enterprises to get around with the laws and to avoid paying high cost. For example, Melamine milk powder incident is due to this lack of protection. This usually happens when a company ignores laws or count on fluke because the regulations are not specific enough to standardize domestic enterprises behaviors.
Source: http://ip.people.com.cn/GB/152255/14588406.html; http://www.chinaacc.com/new/287%2F292%2F332%2F2006%2F3%2Fma941510262901360026440-0.htm; http://hi.baidu.com/%D5%E6%CD%A9%B0%D8%D3%A2%D0%DB/blog/item/532dc8fa74fd439bb801a072.html
DISCLAIMER
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