Setting up branch offices everywhere you go?Economic Daily: implicit local protectionism must be broken!

2022-05-01 0 By

Recently, some enterprises have reported that they will still encounter many obstacles when developing their business in local areas.For example, after the introduction of the subsidy policy for hydrogen fuel vehicles, local governments are enthusiastic about developing hydrogen energy, but their private attitude is to trade the market for capacity, requiring enterprises to set up factories locally.This kind of circumstance is still quite common, the enterprise first arrives at a place, often want to set up branch company specially, in order to leave tax revenue local.They called for the removal of local protection barriers so that companies would no longer have to open companies and factories everywhere, as part of a new development pattern.General Secretary Xi Jinping has stressed on many occasions that we should accelerate the formation of a new development pattern in which the major domestic cycles play the main role and both domestic and international cycles reinforce each other.The current global situation is complex and volatile, and individual countries have frequently imposed restrictions on China, bringing uncertainties to China’s foreign trade and making it more urgent to promote the domestic cycle.On the supply side, China is the only country in the world with all the industrial categories listed in the UN Industrial Classification, and is the world’s largest manufacturing country. 60% of the world’s consumer goods are produced in China.On the demand side, China has a population of over 1.4 billion, with over 400 million people in the middle-income group. The market size and potential are huge.By 2021, China’s per capita GDP will have exceeded us $12,000. The experience of developed countries shows that this stage will gradually shift to domestic demand.But as many enterprises feel, there are still many blocking points in the domestic circulation.The Central Economic Work Conference held at the end of last year had a clear judgment on this, and proposed that structural policies should focus on unblocking the national economic cycle, deepening supply-side structural reform, unblocking the major domestic cycle, breaking through supply constraints, and unblocking all links of production, distribution, circulation, and consumption.It should be noted that China has done a lot to break down local protectionism in recent years.In the past, because of market segmentation, people in many places could only drink local wine.Now, these phenomena are largely absent.However, it should also be noted that in the past, the scope of local protection was mainly in the field of commodities, but now the form is more subtle, gradually shifting to the service industry and production factors, or in the form of technology, standards, supervision and other forms.Why is it hard to eradicate local protectionism?One important reason is that in China’s economic development, decentralization, especially the fiscal guarantee, has produced positive incentives for regional economic development, which has also triggered the thinking of “one mu, three lands” in some places. The policy orientation takes more consideration of one region and one region, rather than the overall consideration from the national perspective.Especially affected by the inertia of GDP-only thinking, local governments tend to favor projects that can drive local economy and increase fiscal revenue, and protect them in explicit or implicit ways, resulting in market segmentation.This is also a lot of our country industry concentration is not high, low level of repeated construction repeatedly banned deep reasons.Under implicit local protectionism, local governments target “large but complete” and “small but complete” industrial chains, making it difficult to implement trans-regional mergers, “zombie enterprises” difficult to exit, and some industries are difficult to clear out of the market even if there is serious overcapacity.In addition, local protectionism has greatly increased market transaction costs. For example, due to the impact of the epidemic, many export enterprises have turned to domestic sales, but most of them have not been successful in their transformation, not least because of the high hidden threshold.For a big country, domestic demand should be the foundation of its economy, and a unified big market is the key.At the end of last year, the Deep Reform Commission of the CPC Central Committee deliberated and approved the Opinions on Accelerating the Construction of a Unified National Market, which laid out a top-level design for promoting relevant work.To this end, all regions need to improve their position, enhance systematic thinking and overall awareness.At the same time, for the deep problems of development mode reflected by local protection, the solution lies in overall planning and the establishment of internal incentive mechanism of domestic unified big market.Editor in chief: Qin Hong Editor in chief: Yang Rong