Beijing requires concerted steps to enhance its business potential

More business-friendly regulations and concerted efforts to reduce pollution are necessary for Beijing to realize its true potential as a commercial hub and allay the perception that business is no longer a core function for the capital, an industry report said on Thursday.

The first standalone Beijing Position Paper 2015/2016, released by the European Chamber of Commerce in China, said that the city continues to be identified mainly with big and overly bureaucratic government, an image it needs to change urgently.

Mats Harborn, vice-president of the EU Chamber, said that there are several obstacles that are hindering the government vision to transform Beijing as a global city, full of international corporate headquarters and high-value-added industries. The paper, which polled respondents from 470 European companies operating in Beijing, said that being in the seat of the central government, businesses in the city were often subjected to duplicate procedures.

Citing an example, it quoted the prevailing tax system in the city. While Shanghai has a more streamlined system due to a single tax authority, businesses in Beijing have to obtain approval during de-registration or relocation processes first from the local bureau before they can apply for approval from the State bureau.

In addition, the strict implementation of visa and hukou regulations in the city have made hiring local and foreign talent difficult for businesses, thereby creating a barrier for sustaining economic growth and nurturing innovation. About 22 percent of the respondents cited poor air quality as a detriment for attracting talent to Beijing, while 39 percent saw it as an obstacle for retaining talent.

A recent report by international real estate service provider Jones Lang LaSalle said the success of urban development in China hinges on furthering attractiveness to businesses, which aside from the talent pool and streamlined administrative procedures also means improved quality of life.

The chamber expressed concern that the government omitted business when it outlined Beijing's core functions of government administration, culture, international exchange and technology, science and innovation last year.

"A continent-sized country like China must have several centers of business, and Beijing should certainly be in the top tier of these," said Harborn.

However, officials said that the omission of business from the four core functions did not mean abandonment of economic development. Instead, Beijing will look to integrate and streamline development with its neighbors.

Mayor Wang Anshun said in March at the China Development Forum that the capital would accelerate the transfer of nonessential functions such as manufacturing out of the capital as part of the Beijing, Tianjin and Hebei province integration.