China Passes New Regulations Focused On Improving The Business Environment

China’s State Council last week issued a new set of measures that appear aimed at foreign concerns about the business environment in China. The regulations, known as the “Measures on Optimizing the Business Environment,” provide a broad range of key high-level principles to govern the business environment that are designed to provide “equal rights, equal opportunities and equal rules” for “all economic forms of ownership” (including foreign and domestic companies).

According to the National Association Manufacturers, the provisions, which will go into effect on January 1, 2010, touch on many issues that manufacturers in the United States have long raised as major concerns in China, but at a high level leaves unclear if and how they would be meaningfully enforced.

The regulations cover a wide variety of areas of business interaction, including intellectual property, taxation, customs, government procurement, licensing and permitting, testing and certification and antitrust enforcement. State-owned enterprises (SOEs) are not explicitly named, however. Various rules state that all types of market entities (a category that the Chinese have argued in the past includes SOEs) must follow-similar rules, but it remains highly unclear whether these rules will actually be applied in practice to SOEs.

The measures state that if government organizations and staff violate these rules (for example, by illegally intervening in market decisions or discriminating against companies), they “shall be held accountable according to law” – a positive statement but one in which the specific consequences are left unsaid.