Promises and policies by Beijing to make it easier for foreign firms to operate in China have yet to bear fruit in the face of ground realities, both local and foreign companies say.
Despite unprecedented reforms at the national level since President Xi Jinping pledged to further open up China at the 19th Communist Party Congress in October 2017, conditions at the local level remain challenging, panellists said at a discussion on China's services sector at the Boao Forum yesterday.
For instance, worldwide insurance giant Allianz was last November granted approval to become China's first fully foreign-owned insurance company.
But despite its national licence, things have been moving at a glacial pace since, as the German insurer still needs to seek approval from the local authorities, according to Allianz SE chief executive Oliver Bate.
"The licensing process is extremely slow... in reality, the market has not opened up," he said. "If you want to bring (foreign) know-how here, we need to dramatically speed up the licensing, particularly in the provinces."
Mr Xi pledged in his 2017 speech to ensure better access to childcare, education, medical services and elderly care by further opening up the services sector and breaking monopolies.
Since then, China has also allowed foreign banks and securities companies to hold majority stakes in their subsidiaries. A new foreign investment law meant to address intellectual property rights and forced technology transfer concerns was also passed this month.
This was Beijing's acknowledgement that while China's fast-growing middle class is able to meet much of its material needs, there is still a big gap when it comes to quality services such as in healthcare and education, said Dr Fred Hu, chairman of Primavera Capital Group and a former partner at Goldman Sachs.
"These are important sources of anxiety and discontent which could be a hidden danger to social stability in China," said Dr Hu, as he homed in on why further and quicker market liberalisation should be an imperative.
Competition thus needs to be stepped up so that the Chinese people will have access to higher quality services, he added.
"Since there is already the political commitment, the relevant authorities must translate the promises made by our leaders into action and refrain from obstructing or impeding implementation of greater openness," he said.
Vice-mayor of Beijing Yin Yong told the event that the government recognised the importance of developing its services sector - which he admitted still lags those in most developed countries - and is pushing hard at reforms.
Services account for about 75 per cent of gross domestic product in such countries but last year they made up just 52 per cent in China.
While the United States imports more than three times as many goods as it exports to China, the numbers are flipped around when it comes to trade in services.
The government is therefore incentivised, through preferential policies, to open up competition in services, not just to increase China's trade competitiveness but also because a healthy services sector is a stable source of jobs, said Mr Yin.
Dr Hu suggested China should begin with removing unnecessary regulations, for instance, in the healthcare and education sectors.
"The health department, education authorities, they have been producing too many regulations which are very rigid," he said.
"Many laws, regulations and policies are quite outdated, but they persist on those outdated policies and are reluctant to change."