Surveying 31 provincial-level regions across China, a new report has ranked their business-friendly levels based on market, administration, laws and regulations as well as cultural environments, highlighting widely different results and interior imbalances.

The report, made by Zhang Zhixue, professor with Peking University’s Guanghua School of Management in partnership with Zhang Sanbao and Kang Bicheng from Wuhan University, urged provincial-level government to carry out high-precision efforts to optimize local business environment by shoring up weaknesses and furthering advantages.

Key findings:

— Regions, divided in seven tiers, exhibit hugely different business-friendly levels

— 13 regions in the silk road economic belt score notably lower than average

— Five regions in the 21st Century Maritime Silk Road project score far higher than average

— The Yangtze River economic belt scores higher than average

— Huge differences among the Beijing-Tianjin-Hebei region

— Seven key areas differ widely, with east China scoring highest, northwest and northeast lowest

Proposals:

— High-precision efforts from provincial-level governments to optimize business environment

— Beijing, Shanghai, Guangdong and Sichuan set example with deeper reform

— Zhejiang, Anhui and Guizhou strengthen weaknesses

— Underdogs focus on improving advantageous factors to boost overall performances

The following is a summary of the report. Click to view the original Chinese-language report in full length.

PROVINCIAL-LEVEL CHART

Beijing tops the chart of provincial-level regions, with Shanghai trailing behind. The rest in the top ten are Guangdong, Sichuan, Jiangsu, Chongqing, Zhejiang, Anhui, Shandong and Guizhou. All regions are ranked into seven tiers from low to high: C, B-, B, B+, A-, A, A+.

Though Beijing and Shanghai are both in tier A+, they show different focuses. While Shanghai prioritizes “corporate experiences” with better online administrative governances and lowered costs for firms, Beijing does better in simplified procedures, optimized services and strengthened supervision, implementing universal tax and fee reductions. As a result, Beijing’s market environment scores far higher than other regions.

Meanwhile, some regions’ scores are not incompatible with their geographical locations and administrative status. Tianjin, despite being a municipality, scores relatively low in administrative and cultural environments. Hubei Province, though having its capital Wuhan as a national key city, scores lower than average in laws and regulations. The overall scores for the two regions are both lower than the median. Jilin, Heilongjiang and Liaoning, all ranked in tier B or B-, are in urgent need of improving their business environments.

The report also keeps scores for each region’s four environment subcategories: market, administration, law and culture, and calculates how balanced a region’s overall business environment is compared to these four factors.

As a result, Beijing, Shanghai, Guangdong and Sichuan is both best in general and most well-balanced, while Zhejiang, Anhui and Guizhou, despite high overall scores, are some severely weak in some subcategories. Shangxi, Shaanxi, Xinjiang and Tibet are well-balanced and their overall business environment are low.

ECONOMIC BELTS

In terms of the Belt and Road initiative, 13 regions including Xinjiang, Chongqing and Shaanxi are included in the silk road economic belt, and the five regions of Shanghai, Fujian,Guangdong, Zhejiang and Hainan belong to the 21st Century Maritime Silk Road.

The 13 regions’ average score is 46.60, considerably lower than the country’s average (53.86), and most of them are not balanced, which means that they have both weaknesses and distinct advantages. Their administrative environments are steady throughout, but their cultural environment scores, strangely, are notably lower than average, in contrast to the opening-up design of silk road economic belt.

Meanwhile, the five southeastern regions score 63.19, higher than average, but Fujian, designated as the strategic core of the country’s 21st Century Maritime Silk Road project, score the lowest among the five. Their market environments all score better, and their opening-up level scores an average of 45.28, far higher than the national average of 16.14.

Encompassing 11 regions that include Shanghai, Jiangsu and Zhejiang, the Yangtze River area boasts many economic giants. Their overall score is 59.41, higher than average. In general, the better the overall score, the more balanced a region is.

Specifically, the downstream of the Yangtze River area that includes Shanghai, Jiangsu, Zhejiang and Anhui perform significantly better than the rest of the area due to their fair and transparent business environments that attract global industries and adopt global business standards. To some extent, the Yangtze River downstream area currently boasts China’s best business environment and increasingly close to the world-leading level. Meanwhile, the middle and upstream regions, though outshined by upstream regions, enjoy sound administrative environment, an advantage in their development plans.

As for the Beijing-Tianjin-Hebei agglomeration, results vary greatly. While Beijing tops the chart, Tianjin and Hebei both score lower than the median, and their interior business environments are not very balanced. Specifically, the three regions’ market and cultural scores differ a lot while administrative and law environments are similarly good. It shows that while Tianjin and Hebei have seen some results in optimizing business environments through learning from Beijing, huge efforts are needed to address market resource distribution, opening-up and credit market construction, and Beijing should lend a hand.

GREATER REGIONS

In terms of the seven geographically divided greater regions, east China scores the highest. Southwest China ranks second despite Tibet at the bottom of the chart. North China is behind in the third place despite Beijing’s highest score. South China is in 4th place, central China 5th, northeast China 6th. Northwest China is at the bottom.

In terms of differences within each region, the report notes that overall business environment is actually proportional to sub-environment imbalance ( east China being the only exception ), meaning that regions that are more business-friendly have failed in coordinated development. Meanwhile, less business-friendly regions are more balanced, which means underdeveloped places are so obsessed with peer comparison that they neglect to create a sound business environment. These regions need to look further and outside for examples.

TAKE-AWAY LESSONS

As models for China’s business environments, Beijing and Shanghai score highest, followed by Guangdong and Sichuan, while Jiangsu, Chongqing and Zhejiang are in the third tier. Hubei and Tianjin, despite national privilege status, are ranked below the median. Jilin, Heilongjiang and Liaoning need urgent need of improving their business environment. Guangxi and Tibet are at the bottom.

While the top four also boast well balanced sub-category environment, Zhejiang,Anhui and Guizhou exhibit severe imbalance that is incompatible with their overall good business environment. Shanxi,Shaanxi, Xinjiang and Tibet have balanced environments but their overall business-friendly levels are quite low.

Offering references for future business environment optimization, the report urges provincial-level governments to carry out high-precision efforts to boost their region’s business-friendly levels.

Specifically, the top four ( Beijing, Shanghai, Guangdong and Sichuan ) should continue to deepen reforms and set an example for other regions. Zhejiang,Anhui and Guizhou, despite high ranking, all have their weakness to address. Meanwhile, those in the lower part of the chart should make full use of their local advantages to make theirselves more business-worthy, and only after that, seek opportunities to make up for weaknesses.

The chart only serves as a reference to help stimulate and guide government efforts and should by no means be taken as a name-and-shame campaign, says the report. “ Hopefully all these regions can learn from each other and close their gaps, eventually helping make China achieve quality development.”

( The report is jointly penned by Zhang Sanbao, associate professor with Wuhan University, Kang Bi, a master degree student with Wuhan University, and Zhang Zhixue, organization and strategy management professor with Peking University’s Guanghua School of Management.)