Biweekly Symposium No. 539: From Favors to General Welfare: Solidifying the Institutional Foundation for China's Economic Development. Lecturer: BAI Chongen Host: ZHAO Nong, Vice Chairman, Unirule Academic Committee Commentators: LAI Desheng, WANG Xiaolu, TAO Yongyi Professor BAI Chongen started with introducing a Doing Business Report by the World Bank annually that set 10 indices to compare the environment for doing business across countries.
A good institutional basis is the premise of economic development. However, according to the World Bank, China’s economic institutional lags behind, which sets predicament for enterprises. For example, in order to get a permit for constructing a building, 95 taxes and fees are required in China which involves getting 192 stamps and contacting over 30 departments. However, the question is, even in such a terrible institutional environment, China still managed to have miraculous economic growth. What is the cause, then?
Favours can be used to describe the practice of governments of all levels to protect and provide special treatment to certain enterprises. In this practice, enterprises can get the resources and licenses they need as long as they cater to the governments, and the latter return favours in the forms that suit the enterprises. Professor BAI stressed that this practice may enable some enterprises to survival and prosper,but it will harm other enterprises as the favours did not cover the majority of the enterprises. This will lead to inequality and unfair competition. The specific situations in China has bred this practice, but to improve the competition environment for enterprises, such practices should be abolished. A general welfare system should be established where enterprises are treated in equal terms. |