1. Recently, the General Office of the State Council issued the "Opinions on Further Optimizing the Business Environment and Reducing Institutional Transaction Costs for Market Entities," another major policy document.

2. Why is the “business environment” being emphasized again at this very moment?

3. As we are currently at a critical juncture of “overcoming difficulties together and reviving the economy,” the State Council dispatched 19 inspection teams to various regions on August 24, uncovering numerous issues with severe repercussions.

4. For example, the inspection teams found that a sole proprietor was fined 66,000 yuan for selling 5 jin of celery;

and a business owner who, in order to submit application materials, bribed officials at the local market supervision bureau and was also forced to treat them to meals on multiple occasions.

5. Such practices will drive small and micro enterprises out of business.

This directive aims to sound the alarm for local governments and provide reassurance to market entities.

“Business environment” is easy to understand, but what does “institutional transaction costs” refer to?

8. In my view, it can be understood as the costs enterprises must bear when complying with government regulations and rules.

9. Wherever there are regulations, there will be regulatory costs.

However, compared to routine operating costs, institutional transaction costs are more variable and often involve hidden “gray areas,” making them difficult to guard against.

10. Small and micro-enterprises have weak risk-bearing capacity and cannot withstand such turmoil.

Large and medium-sized enterprises might be able to weather a few waves, but in such an environment, no one can expect to develop with peace of mind.

11. Businesses are forced to either scrape by and struggle to survive, or relocate to other cities. This represents yet another cost for enterprises. 12. From the government’s perspective, local authorities have invested significant effort in attracting investment.

13. If businesses leave, all the time investment promotion officers spent racing against the clock to identify projects, traveling far and wide to meet potential investors, and haggling during contract negotiations will have been wasted.

14. This phenomenon must be eradicated at its root.

15. The "Opinions" cover five key areas: market access, operational burdens, administrative costs, legitimate rights and interests, and policy expectations. 16. At first glance, it seems like "more of the same."

17. However, even the most forward-looking institutional innovations can only truly take effect if they are thoroughly implemented.

18. For example, an entrepreneur invited to a certain location to discuss a project investment inquired about local epidemic prevention policies beforehand, only to discover upon arrival that the actual practices were completely different from what was described over the phone.

They would either have to turn back immediately or undergo quarantine for several days on the spot.

How are they supposed to conduct business under such circumstances? They had no choice but to rent a car at the airport, have the local authorities seal it, and drive straight back on the highway.

19. Is investment even possible under these circumstances? Would anyone dare to invest?

20. The “Opinions” also contain new elements, such as stabilizing policy expectations for market entities—a concept rarely mentioned before.

21. In some industries, there are always a few "suspended shoes" hanging over their heads.

As long as those boots haven’t hit the ground, it’s hard for companies to expand with confidence or put a stop to layoffs.

22. To hedge against risks, companies end up scaring themselves, leaving themselves ample room to maneuver—where is there room for development or innovation? 23. When the central government issues policies but local authorities fail to implement them, or when regulations are tightened at every level, companies only suffer more.

24. This is precisely what the "Opinions" emphasize:

Focus on strengthening the integrity of government administration

Resolutely rectifying inaction and misconduct

25. Take investment promotion efforts as an example:

Some localities have excellent investment policies with substantial incentives. However, when companies come to invest and set up factories, the promised rewards and subsidies are not delivered on time, which is deeply disappointing.

Whether or not these promises are fulfilled directly impacts a city’s reputation.

If a city repeatedly breaks its promises, word will spread nationwide and even abroad—who would still be willing to invest there?

26. This is precisely why the business environment is so important: if market entities cannot feel confident to move forward, how can we talk about high-quality development? 27. Reviving the economy requires the strength of private enterprises.

28. On September 15, the 2022 National Mass Entrepreneurship and Innovation Week kicked off, and the Premier delivered an important speech.

29. The Premier noted: It is encouraging that the majority of the 13 million new urban jobs created each year come from new market entities and startups.

30. New market entities are like seeds; they require careful nurturing to thrive.

31. Regarding a series of practical tasks, such as “removing explicit and implicit barriers to market access,” the Guidelines specify the responsible departments and timelines, ensuring strict implementation.

32. Of course, Rome wasn’t built in a day, and we cannot expect to see a complete transformation overnight.

However, the momentum has indeed been improving in recent years. Isn’t the continued improvement in the business environment itself a source of confidence for enterprises?