In the last ten years, China’s public procurement market has grown tenfold reaching an estimated $270 billion in 2013. Such significant growth has made the improvement of the public procurement system an imperative for the Chinese Government.
In the context of China’s commitment to enhance its procurement system, it is also seeking to accede the World Trade Organization’s Government Procurement Agreement (WTO GPA). As China looks to necessary procurement reforms, the World Bank has partnered with the Ministry of Finance to support these efforts, which have the potential to have transformational impact.
The Investment Policy team of the World Bank Group’s Trade & Competitiveness (T&C) Global Practice has learned that China is about to adopt a new foreign investment law that would bring about several potentially significant improvements to the current investment regime. Although we have not yet seen an English-language version of the proposed law, and therefore have to rely for the moment on accounts by international law firms and chambers of commerce that have seen (and sometimes commented on) the draft law, I wanted to share the news with the Private Sector Development community because of the new law’s potential impact – not just in China but across East Asia.
China has very significant political and economic clout in the region and across the developing world. Its reforms are closely watched, and they could inspire many other developing and emerging economies to follow suit.
After soliciting comments on the three existing laws, China’s Ministry of Commerce (MOFCOM) issued a draft of the Foreign Investment Law on January 19, also soliciting public comment – a process that, incidentally, should also inspire many countries.
If passed, the new law would abrogate and ‘unify’ the three current laws that regulate foreign investment: namely, the Sino-Foreign Equity Joint Venture Law, the Wholly Foreign-Owned Enterprise Law and the Sino-Foreign Contractual Joint Venture Law. Although going from three laws to one can in itself be a positive thing – simplifying the regulatory environment usually is a good idea – what really matters to the investor community is the substantive or procedural changes that the new law would introduce.
A first change is that the new law would adopt a “negative list” approach, modeled on the system in place in the Shanghai Pilot Free Trade Zone (FTZ). As a reminder: Under a negative-list approach, certain sectors where foreign investment is restricted, capped or prohibited are specifically enumerated on a negative list. And foreign investment in restricted sectors can only proceed through some sort of ex ante screening and approval mechanism by a governmental authority or agency. On the other hand, under such a system, investments in sectors that are not on the negative list can usually proceed without any prior screening and approval, using, for example, the normal company registration process.
The negative-list approach is one that T&C’s Investment Policy Team often recommends to our client countries, because it fosters transparency and predictability and because it reduces government discretion over the admission of investors. Obviously, in this case, we would need to see the actual negative list before we can offer a more definitive assessment. But assuming that the number of sectors on the negative list is not excessive or, better, that sectors previously closed or restricted are now open to Foreign Direct Investment (FDI), the impact of this single change could be very significant.
China and India are hard to ignore. Over the past 20 years they have risen as global economic powers, at a very fast pace. By 2012, China has become the second-largest world economy (based on nominal GDP) and India the tenth. Together, they account for about 36% of world population.
This is for anyone who ever found themselves frustrated by numbers -- myself included.
Right before college, I remember my parents asking me what degree I wanted to pursue. Vaguely, I answered “Anything without math.” Even during my post graduate studies, I consciously picked a degree with less mathematics in its curriculum. The irony is, I now work in the World Bank Group and numbers is its core language. But there is good news, not only for rookies like me, but for everyone – numbers can be fascinating, insightful and even fun.
‘My Favorite Number,’ is a YouTube series that shows how digits can give us unique insight into global development and humanity. World Bank Group’s economists share their stories on their favorite numbers – demonstrating how their brilliance (and humor) reaffirm that numbers are vital to everyday life. The videos show us that economists are not just about numbers. They bring passion and personal perspectives to relevant issues around the world.
Dong Yang is a first-year Ph.D. student at the University of Chinese Academy of Sciences. He majors in public administration. Dong got in touch with us to share his experience using World Bank Data as part of his research.
William Shakespeare once wrote, “There are a thousand Hamlets in a thousand people’s eyes.” Similarly, different people have different understandings of database services. Some people believe it is a type of personalized service, some believe it’s a value-added service, while others believe it’s a solutions-driven service. For us students, database services are vital to our research.
As a form of knowledge service, databases should be adapted to the changing needs of users, supporting both knowledge consumption and knowledge creation. A good database helps not only to convert “data” into “outcomes,” but also achieve the goal of pooling wisdom and creating knowledge by enhancing a user’s creativity with its rich resources and services. In my view, the World Bank’s Open Data has truly fulfilled these functions.
New developments and curiosities from a changing global media landscape: People, Spaces, Deliberation brings trends and events to your attention that illustrate that tomorrow's media environment will look very different from today's, and will have little resemblance to yesterday's.
This week's Media (R)evolutions: China is an Internet Sleeping Giant.