China steps up campaign to promote foreign investment growth – but is it enough?

Foreign direct investment to China fell by about 6% in the first seven months of 2017 in relation to the same period last year, which has raised concerns about China’s appeal as an investment destination and the state of the economy. Furthermore, with China’s economy entering a state of “new normal”, and with China’s traditional low-cost advantage disappearing, China’s central government is seeking ways to further promote and better utilize foreign direct investment in China. In the last few months, the government has made some policy changes to achieve this goal.

  • The Ministry of Commerce announced on 26 September 2017 that it had abolished a regulation for the review and management of the representative office of foreign enterprises in China. The decision was made on 21 August and came into effect from 14 September.
  • The State Council released a circular (Guo Fa [2017] No. 39) on 16 August, which set out measures to promote foreign direct investment (FDI) growth as part of China’s opening-up strategy. The circular entails 22 measures that could be divided into five categories, including reducing market entry restrictions for foreign investment, making supportive fiscal and taxation policies, improving the investment environment for national development zones, attracting foreign talent, and optimising the business environment.
  • On 18 September, 12 national departments – including the State Intellectual Property Office (SIPO), the Ministry of Public Security (SPB), the Ministry of Commerce (MOFCOM), the General Administration of Customs (GAC), the State Administration of Industry and Commerce (SAIC), and the Supreme Court and the Supreme Procuratorate – launched a joint action plan to protect intellectual property (IP) held by foreign businesses.According to the action plan, the authorities will conduct a special operation from September to December 2017 to target the theft of trade secrets, patent violations, and online property rights violations.

Other measures have also been implemented to improve FDI in China, such as those meant to make the establishment of a Foreign Invested Enterprise more streamline. There seems to be a positive trend in terms of policies affecting foreign investors; however, there are still a significant number of challenges when entering China, and it is important to understand these challenges.

For more information, contact us.

Contact the Author
Get in Touch

Please contact us if you have any questions or queries and your local representative will be in touch with you as soon as possible.