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China's economic recovery
EconomyChina Economy

Why is a unified national market now so vital for Beijing’s policymakers?

  • Beijing’s latest economic strategy is a key part of China’s recovery as it pivots to the domestic market
  • But progress may be slow as different rules and red tape between regions continue to act as roadblocks to Chinese business owners

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Illustration: Henry Wong
Frank Chenin Shanghai

When a Zhejiang catering franchise looked to expand beyond the province, its owner thought it would be wise to pick a “pro-business” location as she had no appetite for red tape or runaround.

Sally Liang, who owns several restaurants in Zhejiang province, was drawn by the market size of the southern megacity of Shenzhen – but before long she found the challenges of setting up shop there too much to swallow.

“Naturally, Shenzhen appears on the radar if you think about southern China, but we underestimated the disparities in rules and licensing procedures from one city to another,” Liang said.

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Her plan for eight hotpot restaurants across Shenzhen has now been thrown off course – even after she secured leases and hired local staff – due to the city’s rule that an individual can only apply for one business permit that is only valid for one business premise, which Sally said was different from Zhejiang and Shanghai.

“It means I can only open one restaurant in Shenzhen and where can I find seven other people I trust to apply [for permits] on my behalf?” Liang said.

She is now considering accepting her losses and pulling out of the venture as the outlook becomes unpalatable.

Such yawning discrepancies in approval and market supervision between regions are just the tip of the iceberg. And they are hindering Beijing’s efforts to construct a “nationwide unified market”, a key tool that Chinese leaders are now counting on to grease the wheel of domestic demand, convince foreign investors to stay onshore and counter the decoupling attempts of Washington.
Building a nationwide unified market is now a buzzword: it was touched on at the tone-setting central economic work conference chaired by President Xi Jinping in December last year, specially mentioned at the subsequent State Council meeting by Premier Li Qiang, and again cited at a special press conference organised by the National Development and Reform Commission (NDRC) on December 26.
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