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Good Signal for Foreign Investment in 2017

Jan 17th could be a big day for the foreign enterprises since the State Council issued a circular that provides measures to boost foreign investment, as part of an effort to build "a new open economic system" in China.

China is planning to further streamline government administration, improve regulations and reduce business transaction costs to create a favorable business environment for foreign investment. There is no doubt that this plan will be the good signal to ensure foreign investment leading the foreign enterprises into new level.

However China government did take measures to encourage foreign investment previously such as

1. Continue incentives on use of industrial land for prices as low as 70 percent of the national standard

2. Eliminate the requirement on registered capital amount for foreign investment firms

Lift restrictions on foreign firms investing in rail transit equipment, motorcycle production, fuel ethanol and oilseed crushing

3. Ease restrictions on foreign investment in oil shale, oil sand, shale gas and mineral resources

Set up a registration system for oil and natural gas overseas cooperation projects

4. Adopt the same standards for foreign and domestic companies in managing foreign debt and improving corporate foreign-exchange management

5. Allow companies to pool foreign and local currencies under central management and promote two-way flow of funds

Besides these China now announced more measures and in order to implement the plan, the government decided to further push forward its opening-up policy, with efforts to revise the Catalog for the Guidance of Industries for Foreign Investment, and further open the service, manufacturing and mining sectors.

In addition, it encouraged foreign investment to take part in the implementation of China's innovation-driven development strategy and upgrades in the manufacturing sector, and encouraged foreign talent to start businesses in China.

The circular said the "Made-in-China 2025" initiative also applies to foreign-invested enterprises, while encouraging them to pour more investment in high-end, intelligent and green manufacturing.

Foreign investment is also encouraged to take part in infrastructure construction in energy, transportation, water conservancy, and environmental protection through franchising.

Meanwhile, the government called for creating a market environment of fair competition, which requires related departments to examine the business licenses and qualification applications of foreign-invested enterprises with the same standards and processing timetable as those for domestic-invested enterprises.

Domestic and foreign-invested enterprises should also get equal access to participate in China's standardization reform, to enhance the openness and transparency of the country's investment environment.

The intellectual property of foreign-invested enterprises should also be protected, according to the document.

The circular also called for more efforts to attract foreign investment, allowing local governments to form favorable policies to support foreign-invested projects that can facilitate employment, economic development and technology innovation, and reduce the costs for the investment and operation of foreign-invested enterprises.

The central, western and northeast regions will receive support to undertake industrial transformation of foreign investment. In addition, foreign-invested enterprises in supported industries in western regions will enjoy preferential tax policies.

The National Development and Reform Commission and the Ministry of Commerce will surely coordinate with related departments to strengthen supervision to ensure the implementation of these measures for foreign investment.

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