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Abstract Enterprises are the perceivers of business environment optimization. Whether reform is genuinely enterprise-centered, and whether the real demands of enterprises can be effectively incorporated into the policy agenda, constitute key criteria for evaluating the effectiveness of business environment reform. Enterprise-centered business environment construction is in inherent tension with the traditional path through which local governments previously relied on selective and supply-oriented policy instruments to intervene in the microeconomic sphere. Although the model in which governments directly selected industries and enterprises and allocated factor resources once played a role in the catch-up stage of growth, it also produced problems such as unequal government-enterprise relations, distortions in the order of market competition, and the accumulation of fiscal pressure. It can therefore be seen that business environment reform poses challenges to the way local governments perform their economic functions across multiple dimensions, including the logic of government-enterprise interaction, the instruments of economic governance, and the adaptability of governance approaches to different stages of development.
Although the academic community has widely recognized the enterprise-centered direction of reform and has accumulated a substantial body of case-based descriptions of local practices, existing studies have mostly started from specific reform measures. They tend to examine how local governments optimize services and enhance enterprise satisfaction, while paying less attention to whether the setting of the reform agenda originates from the real needs of enterprises. If market actors are unable to participate in the construction of issues, improvements in the business environment can hardly demonstrate an enterprise-centered governance orientation. Existing literature still provides insufficient explanation of how local governments define reform priorities, how enterprise demands are transformed into policy agendas, and what behavioral logic underlies this process.
Zhejiang’s reform practices from 2017 to 2024 provide an explanatory framework of vertically layered governance for addressing this question. The provincial government began with the standardization of government services. Focusing on matters such as enterprise investment project approval, business registration, and tax and fee payment, it built unified online platforms that transformed fragmented and differentiated administrative procedures into traceable, comparable, and accountable administrative processes. By using digital evaluation mechanisms such as “non-intrusive monitoring” to automatically collect administrative service data, the provincial government set bottom-line constraints on local governments’ micro-level intervention in economic activities through vertical control. On the basis of standardized constraints, local governments established response mechanisms that begin with enterprise demands. From fallback service windows at the district and county levels, to government-enterprise consultation meetings in prefecture-level cities, online circulation of enterprise-related problems, and provincial mechanisms for classified and tiered coordination, enterprise demands have gone through an institutionalized process from case collection and time-limited handling to the formulation of rules and systems based on recurring high-frequency issues. Under the constraints of fair competition and public interest, repeatedly emerging difficulties faced by enterprises are transformed into reform agendas.
The empirical investigation of 3,085 enterprise demands from H City and L District also reveals that enterprises’ expectations of governments at different levels show a clear structural differentiation, further confirming the internal logic of vertically layered governance. Enterprises expect prefecture-level city governments to undertake agenda-setting and strategic planning functions in areas such as industrial layout, labor supply, and improvement of the market environment, and they expect such governments to guide industrial development through strategic capacity and resource coordination capacity. By contrast, enterprises’ demands toward district and county governments are concentrated on supporting functions such as approval services, industrial park infrastructure, land-use coordination, public services, and the maintenance of legal order. It can therefore be seen that local governments should not adopt a uniform and unchanging approach when optimizing the business environment in an enterprise-centered manner. Instead, they should flexibly adjust their actions according to such dimensions as vertical allocation of authority and basic governance capacity, and formulate business environment action plans that are more suitable for local conditions.
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Published: 01 August 2026
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