20 September 2018
China plans to ease the entry barriers for foreign investors in some sectors. Photo: Reuters
China plans to ease the entry barriers for foreign investors in some sectors. Photo: Reuters

POLICY WATCH: More market access for foreign investors

Foreign investors have poured huge amounts of money into China over the years, fueling the nation’s economic ascent. Today, almost all the big global corporate names are present in the country, either to produce goods for export or to sell to Chinese consumers. But now, having tasted success, firms are clamoring for more market access — a wish that could turn into reality soon, albeit partially.  

In a bid to shore up the economy, China announced this week that it will lift the entry barriers for overseas investors in some sectors. The Ministry of Commerce, which oversees the country’s business and investment policies, said it plans to ease restrictions on foreign investment in fields such as accounting and auditing, commercial logistics and e-commerce, and child- and elderly-care facilities.

Foreign investors will also have wider market access in finance, education and culture sectors, commerce minister Gao Hucheng {高虎城} said on Nov. 26. As part of the efforts, authorities will ease regulations on capital registration, equity ratios, and the scope of operations required of foreign stakeholders.

As China is seeking sustainable economic growth by way of boosting domestic consumption and reducing the reliance on exports, Beijing intends to give a free hand to the market by tapping private and foreign investments into wide range of sectors to drive growth and create new jobs. While private capital will power the economic engine, the government can step back and focus on policy planning and execution.

The commerce ministry will speed up efforts to unify laws and regulations for both domestic and overseas investors, and endeavor to keep the investment policy stable and transparent, Gao said.

The Communist Party last month unveiled its boldest set of economic and social reforms in nearly 30 years, focusing on the “decisive” role of markets in putting the world’s second-largest economy on a more stable footing.

In order to lure more foreign investors into doing business in China without restriction of local laws, new free trade zones will be set up across the nation following the establishment of a pilot free trade zone in Shanghai this year.

The acceleration of free trade zone construction will help overcome the weakness in traditional development patterns and in turn bring further openness and reform.

In addition to eyeing more foreign capital, Beijing is also looking to step up Chinese investments overseas. The commerce ministry hopes that Chinese overseas investment will surpass the nation’s use of foreign capital in near future.

This year, China’s overseas investment is expected to reach US$100 billion. The ministry will ease rules to facilitate more Chinese capital to be invested abroad. There will be simplified application procedures, as well as a shift to a report-based mechanism from an approval-based regime. The government will seek to ink bilateral agreements with other countries in order to protect Chinese investors’ interests overseas under a legal framework.

Beijing will ease the overseas investment limits on firms that have competitive advantages, but the firms will need to shoulder their own risks. Companies will be encouraged to seek innovative overseas investments, mergers and acquisitions, and joint-venture projects.

– Contact the reporter at [email protected]


    EJ Insight writer

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