USCBC China Economic Reform Scorecard February 2016

USCBC China Economic Reform Scorecard

Progress Remains Limited, Pace Remains Slow 


Executive Summary

  • The US-China Business Council’s (USCBC) assessment of China’s economic reform efforts remains unchanged since the September 2015 report – reform policies so far have had limited impact on the top concerns of US companies.

  • While “letting the market play a decisive role” remains a fixture of China’s economic rhetoric, policy implementation continues to fall short of, or contradict, this goal. Progress has been made in some areas, but the breadth, depth, and pace of reform remain uneven.]

  • ​Between mid-August and the end of 2015, Chinese government agencies released several policies that provide positive movement in a few areas.

  • State Council commitments to initiate a nationwide negative list for investment management, simplifications to administrative licensing procedures, the lifting of geographical limits for online insurance sales, and efforts to encourage standards harmonization with international methods are examples of reform policies that offer incremental improvement in the business environment.

  • However, systemic issues affecting American and other foreign companies in China remain largely untouched, and the positive steps are offset by other more restrictive moves. For example, several policies released during this tracking period called for “secure and controllable” technology in the medical device, insurance, and ICT industries—an approach that will limit many foreign companies from participating in the market, and feed concerns about the use of national security for protectionist purposes. Other recent developments, such as the release of local implementation plans for Made in China 2025 and its localization targets in various sectors, are counter to China’s stated goal to create a level playing field for both foreign and domestic firms, and call into question whether incentives laid out in the nationwide plan will be extended to foreign companies.

  • While China has pledged to bring its currency in line with International Monetary Fund (IMF) rules as the newest addition to the IMF’s basket of reserve currencies, Chinese regulators’ response to recent instability in the financial market raises questions on the direction of its capital and financial market reforms. These moves have sparked debate on the extent of Chinese government intervention in the economy, despite repeated calls for the market to play a decisive role. These moves have less impact on the day-to-day business environment than headlines suggest, but do raise questions about the direction, scope, and pace of reform.

  • This year marks the beginning of the Chinese leadership’s self-identified period for intensifying reform implementation. The completion of pilot programs in free trade zones and the launch of a new Five-Year Plan for the economy are to usher in a more ambitious reform program, targeted for completion by 2020. As the year begins, questions about the commitment to reforms that will reduce market access barriers and address level playing field concerns of foreign companies remain to be answered.



To view the report, please click the following PDF.


February 2016 Economic Reform Scorecard Full Report