Since 2015, the European Chamber has gradually been shifting the policy spotlight onto local issues, with the release of a series of local position papers. While continuing to advocate on behalf of European business at the central level remains vitally important, the sheer size of China and its vastly differing regions demands that more attention is paid to advocacy at the provincial and municipal levels. This latest local position paper, focussing on Nanjing and Jiangsu Province, includes recommendations on economic transformation and growth, policy reforms and fair enforcement, and the business environment.

Executive Summary

While the Thirteenth Five-Year Economic and Social Development Plan of Jiangsu (FYP) attempts to further much of the success that Jiangsu has experienced in recent years, it includes several components that concern European business. These concerns fall into one of two general categories: content and implementation.

The Nanjing Chapter holds serious concerns about how the FYP will be transformed from words into actions, having grown accustomed to hearing promises and grand plans in the past, but seeing limited action actually taken. The FYP therefore provides an opportunity for the government to demonstrate their resolve to further open up to the world, allow market forces to act freely and provide fair and equal enforcement of the law.

Economic Transformation and Growth

Jiangsu Province’s China Manufacturing 2025 Action Plan remains unclear and seems to simply parrot national strategy rather than developing a clear and locally-relevant set of policies. Adapting the strategy to fit with local conditions, while aligning with international standards, would greatly improve the future prospects of the region’s smart manufacturing industry.

Its smart manufacturing potential is further diminished by a lack of skilled labour that is equipped with the knowledge and experience necessary for high-end production. Very few vocational schools have partnerships with factories, and they struggle to transform theory into practice. A commitment to improving the quality of vocational education and establishing more quality apprenticeship programmes can go a long way towards addressing this problem.

Small and medium-sized enterprises (SMEs)—key drivers of economic growth and innovation—often struggle under the burden of unnecessary regulatory barriers, limited access to financing, unfair competition from SOEs and poor protection and enforcement of intellectual property rights (IPR). The potential for SMEs to make greater contributions to the local economy cannot be fully realised until these issues are all positively addressed.

Nanjing and the wider region benefit tremendously from a strong chemicals industry, which feeds into, and is essential to, so many other industries. However, there is still a lot of scope for improvement here too, such as aligning general and environmental protection standards with international ones and establishing solid communication platforms between the industry and regulators.

Policy Reforms and Fair Enforcement

Creating clear and consistent policies, following through on announced reforms, advancing the rule of law and communicating changes in policies and regulations with the private sector—all areas that European business has reported as currently lacking—will create a more predictable and open business environment and inspire greater levels of investor confidence.

The Nanjing Chapter applauds the recently announced reforms to the customs system. However, an unfortunate lack of follow-through on recent promises has left many cynical that such change will actually take place. By fully pursuing this new plan to its completion the local government would signal a greater willingness to earnestly implement reforms.

Current visa and hukou policies are limiting the ability of businesses to attract the talent they need. As provincial-level governments have a certain degree of control over visa requirements and hukou policy, Jiangsu should push through reforms that will help to attract a smarter, better-equipped workforce.

European companies—struggling against unequal treatment, a preference in the local economy for SOEs and a lack of market access—are finding it increasingly difficult to compete. Opening public procurement to the free market and working to level the playing field between SOEs and privately-owned enterprises (POEs) would go some way towards addressing this imbalance.

Business Environment

Air pollution remains a major concern for locals and foreigners alike, and it is extremely concerning that limited action has been taken to resolve the problem. Continuing progress in making pollution standards for coal power plants more stringent, fully enforcing all environmental standards and encouraging public transit should all be pursued.

Low quality and restricted Internet is another major source of frustration for both local and foreign companies. It limits proper research and certain communication with offices abroad and prevents connection to many essential websites. Improving Internet speeds through the creation of better infrastructure and by working closely with the central government to bring about change to national-level policies that regulate information would improve the operating conditions in Jiangsu a great deal.

Finally, all government departments throughout Jiangsu should look to improve their bilingual services. Currently, government websites—which are a first port of call for many potential investors seeking information about the region—are rarely updated and information is often inaccurately translated, which creates unnecessary problems. Addressing these issues will create a more welcoming and certain environment for both existing and potential investors.

To download the Nanjing Position Paper, please click here.