The already fierce competition among Chinese cities will intensify further in the future, and the winners will be decided by their business environments, as the State Council, China's Cabinet, has issued a guideline recently to further improve the country's market conditions so as to serve companies better.

The document containing the guideline stresses six categories of policies and measures. They include more streamlined and efficient approval procedures for construction projects and their financing, easier approval processes and conditions for enterprises generally, and an optimized business environment for foreign trade and investment.

In addition to creating a long-term mechanism for improving business environment continuously, the guideline highlights support for employment and entrepreneurship, and improved quality and efficiency of services provided to businesses.

Thanks to its early recovery from the COVID-19 pandemic, China has already set goals to create the best business environment and give full play to the decisive role of the market in the allocation of resources. The nation will deepen economic cooperation in more fields with countries and regions related to the Belt and Road Initiative. It will also accelerate the pace of sealing more bilateral and multilateral free trade deals with economies such as Japan, South Korea, the Association of Southeast Asian Nations and the European Union.

At present, we often highlight the role of the market instead of the government. If local governments can benchmark the World Bank's 10 indicators of business environment and implement precise policies, China's business environment will advance by 10 in 2021 and it will be possible to enter the world's top 20 in this category.

According to the latest Global Business Environment Report issued by the World Bank in late 2019, China's business environment ranking rose remarkably to 31st spot, in comparison with 46th from a year earlier. Noted progress has been made in the protection of medium and small investors, cross-border commerce, setting up of new companies and in granting construction permits.

Even though a large number of local governments in China still attach great importance to GDP growth, their priorities should be the improvement of the business environment, because the competition among cities in the next stage of development will essentially be a contest for the business environment. There are three factors to support this perspective.

First of all, the current international situation has become more complex. Forced by rising unilateralism and protectionism, the world will see more trade frictions in the future. Under such circumstances, whether China can create a sound business environment in the world certainly will receive global attention, like its prevention and control works in dealing with the pandemic did. The improvement of the business environment hence will attract more foreign investment. This will be a key task during the post-pandemic era.

Second of all, the focus of the new round of competition among Chinese cities is on how to recombine production elements, increase reform momentum, adjust economic structure, build a law-based and international business environment during the post-pandemic era. To improve economic efficiency under the supply-side structural reform, we must avoid the repetitive industrial structure practiced in the past, promote the transformation of market entities, create new economic growth points and support entrepreneurial innovation.

The third factor is, the continuous improvement of China's business environment has brought more development opportunities. It is also noted in World Bank's Doing Business 2020 Report that the ranking of China's business environment has risen from 46th to 31st, and is better than the United States in terms of gaining power supply, executing contracts and asset registration. However, there is a big gap with the US in terms of starting a business, obtaining loans, paying taxes, and handling bankruptcy protection issues. With adequate policy assistance, China is fully able to make changes in these areas and upgrade its business environment in the global market next year.

One of the key factors spurring corporate activities, business environment plays a significant role in a country's economic growth, foreign investment utilization and employment opportunities. So, China needs to raise its works in the following areas to create a high-level business environment:

It should be one of the government's priorities to build a market-oriented, legalized and internationalized business environment. Supported by China's Foreign Investment Law that came into effect on Jan 1, it is necessary to enrich and extend the environment for fair competition among various market players, protect the legal rights of entrepreneurs in accordance with the law, implement a negative list of market access and cut unnecessary administrative procedures, as well as further simplify compliance and alleviate the challenges faced by multinationals.

To reach these goals, it requires equal treatment of foreign-invested, State-owned and privately-owned companies. In addition, we must step up the opening-up of the overall industrial and supply chains to build an open, stable and safe environment.

Apart from taking specific measures to further lower the market-entry threshold for the education, medical services and sports sectors, the government also pledged in late July that the operational and investment barriers to foreign-invested and foreign-trade firms, such as offering cities at or above prefecture level mandates to register foreign-invested firms, will be removed.

It is equally critical for the government to adopt and popularize an inclusive and innovative regulatory concept to facilitate the creation of an advanced business environment. At present, we must move from using preferential policies to attract foreign investment to providing a fair market environment, reduce system transaction costs, effectively provide legal guarantees and a precise policy system to attract foreign investment. Because China's economic development will be in a critical period of transition from the old to the new economy after the pandemic, vigorously cultivating new kinetic energy is helpful to fully stimulate the vitality of all market players.

To further consolidate its position in the global supply chain, China will think it is fairly practical to further highlight the role of the China International Import Expo in Shanghai. The event will serve as a benchmark for the post-epidemic recovery of the global economy. It will push more companies to either invest or expand their market presence in China.

However, we must be aware that building a business environment is a long-term systematic process and needs strong executive ability. In the future, cities and regions with a better business environment will attract more foreign investment and increase their GDP, therefore forming a virtuous circle. It will bring encouraging factors to support sustainable and high-quality growth of the national economy.

Eager to enhance their developing strength, the municipalities of Beijing and Shanghai, and Guangdong and Jiangsu provinces have all introduced a slew of policies in upgrading their business environment. With more cities and regions planning to bring in new measures to attract foreign direct investment and build platforms for high-tech and green industries, it is certain that many Chinese cities will possess high-level business environment in the next round of competition among global cities.

Moreover, the development of the Hainan Free Trade Port and the Guangdong-Hong Kong-Macao Greater Bay Area, as well as other incentives, will also effectively optimize Chinese cities' industrial structure and promote foreign capital flows into the country.

The writer is vice-chairman of the China Center for International Economic Exchanges and former vice-minister of commerce.

The views don't necessarily reflect those of China Daily.