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China to Open More Sectors to Foreign Investment

The State Council recently examined and passed the Circular on Certain Measures for Further Opening Up to the Outside World and Actively Making Use of Foreign Capital, which will be issued before long. The Circular states that steps will be taken to open more sectors to foreign investment, further create a level playing field and strengthen the work of attracting foreign investment.

On promoting fair competition between domestic and foreign enterprises, the Circular highlights the importance of maintaining a fair financing environment, including financing channels and conditions, and supports the widening of financing conduits for foreign-funded firms.

On opening more sectors to foreign investment, the Circular puts forward a series of measures for opening up. Guided by the concept of open development, the Catalogue for Guidance of Foreign Investment Industries and related policies and regulations will be amended to ease restrictions on foreign investment in services, manufacturing, mining and other sectors.

Specifically, in the service sector, restrictions will be relaxed for foreign investment in banking financial institutions, securities companies, securities investment fund management companies, futures companies, insurance institutions and insurance intermediaries. Auditing and accounting, architectural design and rating services will be open to foreign investment and restrictions will be gradually lifted for foreign investment in telecommunications, internet, culture, education and transportation.

In the manufacturing sector, emphasis will be put on easing restrictions on transport equipment manufacturing, automotive manufacturing, fuel ethanol production and fat and oil processing. In the mining industry, restrictions will be eased on oil shale, oil sand, shale gas and other unconventional oil and gas projects and on the exploration of mineral resources. File recording will replace approval for Sino-foreign joint venture petroleum and natural gas projects.

The Circular states that the policies and measures of the “Made in China 2025” strategy will apply equally to domestic and foreign-funded enterprises. Foreign companies will be encouraged to invest in high-end manufacturing, smart manufacturing, green manufacturing and production-related services such as industrial design and creative industry, project consultancy, modern logistics, and inspection, testing and certification, as well as in the transformation and upgrading of traditional industries.

The Circular puts forward seven measures to ensure fair competition between domestic and foreign-funded enterprises, including review of foreign investment policies to see if they promote fair competition, fair review of applications from foreign-funded firms for business licence and credentials, fair participation in the work of drawing standards and in government procurement, and fair protection of intellectual property rights.

The Circular also elaborates on the provision of a fair environment, channels and conditions for financing. Foreign-funded firms will be given support in widening their financing conduits. They will be allowed to get listed on the Main Board, the SME Board, the Growth Enterprises Board and the new “third board” (or over-the-counter equities market), as well as issue enterprise bonds, corporate bonds and convertible bonds, and use non-financial debt financing instruments. The registered capital system will be made fairer by abolishing the minimum registered capital requirements for foreign-funded companies and implementing a unified registered capital system for domestic and foreign-invested enterprises.

China will also further strengthen the work of attracting foreign investment and allow local governments to formulate preferential policies within their statutory power and offer support to projects that may contribute to local employment, economic development and technological innovation.

For more information of the Circular in Chinese, please see: http://www.gov.cn/xinwen/2016zccfh/31/index.htm

Content provided by Picture: HKTDC Research
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