China rolls out policies to improve foreign investment environment

China’s State Council has recently issued guidelines to further optimize the country’s foreign investment environment and beef up foreign investment inflow.

The guidelines are expected to address major issues in the business environment that foreign-invested enterprises are concerned about.

Chen Chunjiang, assistant minister of Commerce, said that the guidelines introduced a new batch of targeted and highly valuable measures to stabilize foreign investment.

Covering six key areas, including improving the quality of utilizing foreign investment and guaranteeing national treatment for foreign-invested enterprises, the measures aim to effectively bolster the confidence of foreign investors and attract more high-quality foreign investment.

The guidelines advocated expanding the scope and intensity of opening up, calling to further expand the comprehensive pilot program for opening up the service sectors.

The guidelines encouraged foreign-invested enterprises and their R&D centers to undertake major scientific research projects, called for the establishment of a sound Qualified Foreign Limited Partner (QFLP) foreign exchange management facilitation system, and supported QFLPs in conducting relevant investments with RMB raised abroad.

The guidelines urged efforts to improve the level of investment and business operation facilitation.

The guidelines pledged to provide convenience for foreign executives and technical personnel of foreign-invested enterprises, as well as their families for entry, exit, and residence in China.

Special inspections will be carried out to ensure the fair participation of business entities in government procurement activities, according to the guidelines.

Full-process information disclosure in standard formulation and revision will be promoted to support foreign-invested enterprises to participate in standard formulation work on an equal footing in accordance with the law.

The guidelines also called for efforts to improve the mechanism for rapid and coordinated protection of intellectual property rights and expedite the progress of handling cases with clear facts and substantiated evidence in accordance with the law.

The guidelines pledged to bolster efforts guiding foreign investment.

According to the guidelines, local governments are supported to implement complementary incentive measures for foreign-invested enterprises in encouraged industries within the statutory authority.

The guidelines also pledged efforts to develop innovative cooperation procurement methods and support foreign-invested enterprises to develop globally leading innovative products through first-time purchases.

The guidelines called for intensified efforts to strengthen foreign investment promotion and service guarantees. Relevant measures include establishing and improving the system of roundtable conferences for foreign-invested enterprises, facilitating the signing of certificates of origin of free trade agreements, and providing convenience for foreign-invested enterprises with tariff reduction policies.

In recent years, China has continuously improved the business environment and implemented various measures to assist foreign-invested enterprises, striving to give foreign-invested enterprises a greater sense of gain, said Liu Lin, a person in charge of the Credit Supervision and Management Department of the State Administration for Market Regulation.

The guidelines pledged proactive efforts to facilitate market access for foreign-invested enterprises in China, calling for strict implementation of the management mechanism of pre-establishment national treatment plus negative list for foreign investment.

The guidelines called for equal treatment of Chinese and foreign-invested companies, striving to foster fair market competition.

China has released five supporting regulations for the Anti-Monopoly Law, offering clear, transparent and predictable guidance for compliant business practices.

The guidelines promised strengthened efforts to bolster intellectual property rights enforcement and trade secret protection.

In the first half of 2023, China investigated and dealt with 17,100 cases of violations in the areas of trademarks and patents. These actions upheld equal protection of intellectual property rights for Chinese and foreign firms according to the law.

The guidelines pledged support for foreign-invested enterprises in participating in standard formulation on an equal footing.

The Standardization Administration of China issued guidance to bolster standardization technical committees and promote the engagement of foreign enterprises and experts in standards development.

Currently, 62 percent of standardization technical committees in China have members from foreign-invested enterprises.

Foreign-invested enterprises are generally concerned about equal participation in government procurement activities.

Fu Jinling, an official with the Ministry of Finance, said the ministry highly values optimizing foreign investment environment in government procurement. It aims to eliminate unreasonable restrictions and barriers, and protect Chinese and foreign enterprises’ equal participation in government procurement according to the law, Fu added.

Against the backdrop of the slowdown in the world economy recovery and the downturn in global cross-border investment, the actual utilization of foreign investment in China’s manufacturing industry in the first half of 2023 was basically the same as the same period last year, with high-tech manufacturing seeing 28.8 percent year-on-year growth in actual foreign investment use, said Yao Jun, an official from the Ministry of Industry and Information Technology.

This shows that foreign-invested enterprises are still confident in investing in China, and that China’s manufacturing potential will continue to bring sustained profitability for foreign-invested enterprises.

China has now fully opened up its general manufacturing sector to foreign investment. Restrictions on foreign investors in manufacturing in pilot free trade zones (FTZs) have been removed from the negative list.

Furthermore, restrictions on foreign automakers’ access to the Chinese market have been lifted since 2022.