China wants to end World Bank business rankings

Displeased with their low ranking, China wants to eliminate the World Bank’s ‘Doing Business’ global report, saying the institution shouldn’t be ranking its members.

China was ranked 91st in ease of doing business, which pointed to the difficulty in paying taxes and the long waits for construction permits as unfavorable business conditions in the world’s second largest economy.

The Chinese say the report doesn’t fairly assess fast-growing economies and also has a built-in bias towards regulation.

Last autumn, China’s World Bank Deputy Executive Director Bin Han said the report, “used wrong methodologies, failed to reflect facts, misled readers and added little value to China’s improvement of the business environment,”  Financial Times quoted.

China’s Executive Director at the World Bank, Shaolin Yang, has not yet commented on the crusade against the ratings.

Jim Kim, the Korean-American President of the World Bank, set up an independent review of the report, which is chaired by South Africa’s Planning Minister Trevor Manuel, but the impartiality of his panel has raised questions of bias.

Jeffery Owens, the former head of tax at the Organization for Economic Cooperation and Development, who is involved in the review process, told FT:

“Basically countries that have no labor regulation whatsoever get the best marks,” he said. “The publication does have a deregulating bias which I don’t think can be got rid of without removing the ranking or even the indicators altogether.”

Ease of Doing Business- World Bank Global Ranking

1.Singapore

2. New Zealand

3. Hong Kong

4. United States

5. Denmark

6. Norway

7. United Kingdom

8. South Korea

9. Georgia

10. Australia

In favor of the report, seeing it as objective and fair, is Simeon Djankov, the former finance minister of Bulgaria who helped established the report in 2004.

“If you don’t have the aggregate ranking then you’re going to lose a lot of the immediate contact you have with policy makers,” said Djankov.

“The moment you start saying that we’re afraid to publish this report in this way then what is next?”

The panel will report their findings at the end of May and Jim Kim will have to either accept or refuse its recommendations

“We will make decisions about the report after we get the review, not before,” a spokesman for the bank told FT.

Kim, whose first trip to Washington DC was to protest the Bank, became the 12th president of the 185 member lending organization in July 2012, just as the report was being published.

In a February interview Kim told RT, “the bank of 20 years ago is very different to the bank today. Today, I have to say, the fundamental values and mission of the bank are completely in line with the work that I’ve done my entire life.”

China’s assertiveness over the ranking is a recent example of its challenge to liberal economic paradigms. 

The report, released in October 2012 ranked the World Bank members on their ease of doing business, from 1-185, using benchmark calculations from June 2012. 

Singapore came out on top for the seventh consecutive year, and Georgia made its debut into the top ten. Poland jumped the highest in the rankings, with great improvement in property registration, taxes, and contract enforcement in the last year.

Sri Lanka, Ukraine, Uzbekistan, Burundi, Costa Rice, Mongolia, Greece, Serbia, and Kazakhstan were recognized alongside Poland as having most improved ease of business in their countries. The full report can be viewed on the World Bank's website.