China Releases Guiding Opinions on Attracting Foreign Investment

China Releases Guiding Opinions on Attracting Foreign InvestmentChina’s Ministry of Commerce recently released the Guiding Opinions on Attracting Foreign Investment which sets out measures for China to attract foreign investment in China. Detailed information can be found below.

Current Situation

According to the Opinions, China is now facing tough competition for foreign investment, specifically:

  • Many developed countries have adopted economic stimulus packages to accelerate the development of emerging industries in an effort to occupy larger shares of the future global market.
  • Emerging economic entities have become the new investment focus of multinational corporations, and countries around China have implemented various measures to attract foreign investment, including offering preferential tax policies and opening up financial market.
  • The rising costs of production and increasing shortage of land and other resources in China have decreased the willingness of foreign investors to invest in the country.

However, China still holds many competitive edges in attracting foreign investment, such as:

  • China’s national economy has maintained sustained, rapid and sound growth and its modern market system has been improved gradually. Meanwhile, policies adopted by the central government to expand domestic demand have stimulated the growth of China’s domestic consumer market.
  • China’s gradual improvements in labor quality and relatively developed infrastructure are expected to help attract more high-quality foreign investment.
  • The country’s foreign-related laws and regulations have been improved steadily and the protection of intellectual property has been strengthened significantly.

Measures to attract foreign investment

Measures provided by the Opinions to attract foreign investment in 2013 include the following:

  • Guiding foreign investment to high value-added manufacturing sectors
  • Promoting the opening-up of the service sector
  • Strengthening the role of foreign investment in the introduction of advanced technologies and intelligence
  • Promoting the transformation and upgrading of foreign investment utilization in the eastern region
  • Encouraging the central and western regions to undertake domestic and foreign industry relocation
  • Improving the investment environment to effectively protect the legitimate rights and interests of foreign-invested enterprises
  • Strengthening the protection of intellectual property
  • improving the quality of foreign capital utilization

Furthermore, the Opinions provide that China welcomes foreign investment in the following sectors:

  • Advanced manufacturing
  • High technology
  • Modern services
  • Energy-saving
  • New energy
  • Modern agriculture

In addition, the state financial system shall improve the investment environment to enhance China’s international competitiveness in attracting foreign investment and encourage foreign investors to participate in the country’s innovation-driven development.

According to a joint research project presented by the China Development Research Foundation and PricewaterhouseCoopers, China looks to remain one of the major destinations for global investment. The research is based on survey responses by chief executive officers (CEO) from 227 multinational companies. Among them, 70 percent said they plan to increase their investment to China over the next five years.

CEOs surveyed in the report have ranked the following three factors as the top policy commitments that would have the greatest impact on their businesses:

  • Increasing domestic consumption
  • Deepening financial reforms on foreign exchange and interest rates
  • Doubling per-capita income by 2020

The following three points were highlighted as the top-three measures to improve China’s competitiveness:

  • Improving government transparency and anti-corruption efforts
  • Reducing economic intervention
  • Speeding-up capital market reforms

In February, foreign direct investment (FDI) into China rose for the first time in nine months, reaching US$8.21 billion, up 6.32 percent year-on-year.

“The rebound is a heartening fact,” said MOC Spokesman Shen Danyang, adding that it showed the competitiveness of China’s economy and foreign investors’ confidence in the country’s business environment and growth prospects.

For the first two months of 2013, FDI from the European Union to China surged 34.01 percent to US$1.21 billion, while FDI from the United States decreased by 5.37 percent to US$497 million.

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