I. Background

International Background: September 2022, World Bank announced abolition of original Doing Business report and development of Business Enabling Environment (BEE) project. December 2022, published BEE Concept Note. May 2023, released Business Ready (B-READY) Methodology Handbook and Manual and Guide.

B-READY will implement from 2023, rolling out in three batches globally. China Hong Kong will be in first batch of 60 economies, with mainland China in second batch.

Under宏大背景下 including pandemic, geopolitical changes, and technology development, B-READY established three pillars: regulatory framework, public services, efficiency, with high-profile digital technology application, environmental sustainability, and gender equality as guidelines.

Domestic Background: Under guidance of General Secretary Xi on optimizing business environment, following Party Central Committee’s emphasis, China has advanced “streamlining administration, delegating power, and improving services” reform, issued and implemented Optimization of Business Environment Regulations.

II. Key Points in New Assessment

Macro Guidelines: Secured transactions content mainly in Financial Services chapter. Core point is “access to finance.” B-READY methodology handbook page 313 states: “Under this approach, all secured transactions, no matter how denominated, are classified as security rights and are subjected to an identical legal framework… allows borrowers to use as much of their movable assets as collateral to get credit.”

Micro Evaluation: For secured transactions, evaluation focuses on:

1. Unified Legal Framework: Integration of security rights including transfer guarantees, financial leasing, factoring, ownership retention, debtor/creditor equality.

2. Movable Asset Types, Debts, Obligations: Types includable as collateral, including accounts receivable, inventory, tangible movable property, future assets.

3. Priority/Enforcement: Priority rules, enforcement methods including auction, private sale, pactum commissorium issues.

III. Key Issues Analysis

A. Transfer Guarantee

Judicial interpretation Articles 68, 69 clarify transfer guarantee. Courts tend to construct transfer guarantee as security interest with strict distinction between creditor and property rights, with mandatory liquidation obligation.

B. Accounts Receivable Factoring

Civil Code Articles 761-769 provide comprehensive factoring contract rules. Insurance Article 66 further coordinates priority among competing rights.

C. Inventory

Civil Code Articles 396, 404 and judicial interpretation Article 56 permit inventory as collateral.

D. Future Assets

China permits future receivables, providing positive attitude toward security interests on future assets.

E. Collateral Description

Civil Code permits generalized description of collateral, with judicial interpretation Article 53 clarifying reasonable identification standards.

F. Automatic Extension Issues

China’s current system lacks automatic extension of security interests to proceeds, representing significant gap compared to international standards like US UCC Article 9-315.

IV. Conclusion

B-READY assessment deserves careful analysis by Chinese government agencies, enterprises, and legal professionals. While China has made significant progress in information technology and network construction, we need scientific, rational handling of domestic practice and international experience absorption.

China has unique national conditions and legal system. Business environment construction should respect domestic history and reality. Deliberately pursuing B-READY scores or blindly conforming to foreign rules without considering Chinese legal system would be counterproductive.

B-READY is only one measure of China’s business environment, not the only measure. We need to improve our legal system consistency and completeness through mutual learning.