A recent report revealed Shanghai has the best business environment in all of the country, China Daily reports.

China's urban business environment index, released by the China Strategic Culture Promotion Association, the China Economic Media Association, WANB Institute and YICAI Research Institute, stood at 86.73, followed by the capital of Beijing at 84.63 and Shenzhen at 84.48.

Five “soft environment” indexes are used to evaluate Chinese cities, being technological innovation, financing, talent, culture and life, and a further two “hard environment” indexes, being natural resources and infrastructure.

Other indicators include the supply of high-end talent, government investment in culture and education, attractiveness for foreign investment and consumption scale.

Shanghai boasts the highest infrastructure and cultural environment indexes, while the financial hub's talent, technological innovation and financing indexes sit in the top three.

Meanwhile, the soft environment index in Beijing placed first in China, but its hard environment index suffered as a result of poor natural resources.

On the other hand, the best hard environment was seen in Shenzen, which boasts a strong technological innovation index.

The report also revealed that the hard environment in Chinese cities has improved, but soft environments could be better and would benefit a business environment largely.