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5 White Paper on the Business Environment in China
Foreign investment in agriculture has historically (and resources of foreign investment will be allocated to advanced
unsurprisingly) grown alongside reform in the sector. e agriculture.21
Ministry of Commerce (MOFCOM) reported that 2006 saw
458 foreign-invested projects (an increase of 5.8 percent over Finally, although the Ministry of Agriculture published
2005) with a total utilized investment of $240 million (an statistics indicating a 13.2 percent year-on-year growth in
increase of 18.9 percent).16 agricultural exports between 2002 and 2010, the Chinese
Academy of Social Sciences is predicting that the import and
Temperate eastern China has historically received the ma- export of China’s agricultural products will likely slow in the
jority of foreign investment in agriculture (as of 2005, nearly medium- to long term.22
60 percent of the total since the “opening up”), although sus-
tained e orts are being made to drive investment into central Another recent development is the proliferation of agricul-
and western China. tural insurance. After a pilot program involving six provincial
regions, it was reported that “agricultural insurance income
Interestingly, in 2006 only 12 of the total 458 foreign- reached 10.54 billion yuan by November [of 2008], soaring
invested projects involved investments of more than $20 112 percent compared with the same period [in 2007],” and
million,16 suggesting that the dramatic economies of scale wit- that a total of 4.2 billion yuan in compensation had been paid
nessed in secondary industry have yet to take hold in agricul- out to more than 10 million households as a result.23
ture—which, despite experimentation with communal farm-
ing in the 1950s, has historically been driven by individuals Additionally, a pilot pension program was launched
or families working small parcels of land who have in the past in 10 percent of the nation’s counties in 2009. By 2011,
been (and currently are) largely self-su cient.5 Southwestern University of Finance and Economics Professor
Lin Yi told China Daily that 200 million individuals were
In 2007 549 foreign investment projects were initiated participating in the program. It is expected to cover the entire
in the sector, but in 2008 that number decreased to 470. nation by 2020.24
Of those set up in 2008, the majority (332) were in eastern
China, with 76 and 62 located in central and western China, In addition to the subsidies and the new pension program,
respectively. ese projects accounted for a 40 percent year- improvements have been made to rural health insurance un-
on-year increase in utilized foreign capital (for a total of ap- der the “New Rural Cooperative Medical Scheme.” e pro-
proximately $550 million), however.17 gram, which reportedly covered 93 percent of the Mainland’s
farmers in 2010, under which “the government will raise its
In 2009, 515 foreign investment projects had been real- subsidy to 200 yuan per person each year from 120 yuan in
ized in agriculture, up from 2008’s gures; utilized foreign 2011 [while the individual] pays 30 yuan.” e program will
capital similarly grew to reach $751 million (a 35 percent furthermore increase reimbursement rates for “basic and es-
year-on-year increase). Regional distribution of these projects sential” drugs and services from 60 to 70 percent and raise the
was generally similar to in years past, although the nation’s maximum reimbursement amount from 30,000 to 50,000
central region attracted a greater share than it had in 200818 yuan.25
(consistent with, or perhaps a result of, the Central Govern-
ment’s e orts to drive investments inland). 2010 saw an additional insurance scheme initiated: a
weather insurance pilot program in Fujian was announced
According to a “Regular Press Conference of the Ministry after a China Insurance Regulatory Commission (CIRC) re-
of Commerce” held in 2010, the number of newly established port detailed a systemic inability to adequately compensate
foreign enterprises in the agriculture, forestry, animal hus- for losses due to natural disasters: “Insurers cover about 30
bandry and shery industries was 929, up by 3.7 percent year- percent of losses from natural disasters in developed countries,
on-year, and the actual utilization of foreign capital amounted but that gure is below 5 percent in China—a country that is
to $1.91 billion, up by 33.8 percent year-on-year. ese new frequently hit by a wide range of natural disasters.”26
enterprises accounted for 3.4 percent of the national total of
newly-established foreign-invested enterprises and 1.8 percent A 2010 CIRC report indicated that agricultural insurance
of total paid-in foreign capital, respectively.19 premiums over the course of 2009 totaled 13.39 billion yuan
in 2009.27
FDI in the agricultural industries has historically focused
on technical cooperation with local producers; the proportion Despite its fast expansion following that original pilot
of foreign investment with an export focus is quite small.19 program, agricultural insurance is still somewhat under-
regulated and potentially problematic. According to an
e trend in agricultural FDI is perceived to be upward, unnamed State Council o cial speaking to China Daily,
however: overcapacity in the manufacturing sector will likely issues include “a lack of continued policy supports and unclear
drive more FDI to the agricultural and service sectors, Asian responsibilities for relevant departments.” Accordingly, the
Development Bank senior economist Zhuang Jian told China State Council’s Legislative O ce issued a draft proposal
Daily in 2009.20 In 2011, China Daily speci ed that the for agricultural insurance regulations in May of 2012. e
98
Foreign investment in agriculture has historically (and resources of foreign investment will be allocated to advanced
unsurprisingly) grown alongside reform in the sector. e agriculture.21
Ministry of Commerce (MOFCOM) reported that 2006 saw
458 foreign-invested projects (an increase of 5.8 percent over Finally, although the Ministry of Agriculture published
2005) with a total utilized investment of $240 million (an statistics indicating a 13.2 percent year-on-year growth in
increase of 18.9 percent).16 agricultural exports between 2002 and 2010, the Chinese
Academy of Social Sciences is predicting that the import and
Temperate eastern China has historically received the ma- export of China’s agricultural products will likely slow in the
jority of foreign investment in agriculture (as of 2005, nearly medium- to long term.22
60 percent of the total since the “opening up”), although sus-
tained e orts are being made to drive investment into central Another recent development is the proliferation of agricul-
and western China. tural insurance. After a pilot program involving six provincial
regions, it was reported that “agricultural insurance income
Interestingly, in 2006 only 12 of the total 458 foreign- reached 10.54 billion yuan by November [of 2008], soaring
invested projects involved investments of more than $20 112 percent compared with the same period [in 2007],” and
million,16 suggesting that the dramatic economies of scale wit- that a total of 4.2 billion yuan in compensation had been paid
nessed in secondary industry have yet to take hold in agricul- out to more than 10 million households as a result.23
ture—which, despite experimentation with communal farm-
ing in the 1950s, has historically been driven by individuals Additionally, a pilot pension program was launched
or families working small parcels of land who have in the past in 10 percent of the nation’s counties in 2009. By 2011,
been (and currently are) largely self-su cient.5 Southwestern University of Finance and Economics Professor
Lin Yi told China Daily that 200 million individuals were
In 2007 549 foreign investment projects were initiated participating in the program. It is expected to cover the entire
in the sector, but in 2008 that number decreased to 470. nation by 2020.24
Of those set up in 2008, the majority (332) were in eastern
China, with 76 and 62 located in central and western China, In addition to the subsidies and the new pension program,
respectively. ese projects accounted for a 40 percent year- improvements have been made to rural health insurance un-
on-year increase in utilized foreign capital (for a total of ap- der the “New Rural Cooperative Medical Scheme.” e pro-
proximately $550 million), however.17 gram, which reportedly covered 93 percent of the Mainland’s
farmers in 2010, under which “the government will raise its
In 2009, 515 foreign investment projects had been real- subsidy to 200 yuan per person each year from 120 yuan in
ized in agriculture, up from 2008’s gures; utilized foreign 2011 [while the individual] pays 30 yuan.” e program will
capital similarly grew to reach $751 million (a 35 percent furthermore increase reimbursement rates for “basic and es-
year-on-year increase). Regional distribution of these projects sential” drugs and services from 60 to 70 percent and raise the
was generally similar to in years past, although the nation’s maximum reimbursement amount from 30,000 to 50,000
central region attracted a greater share than it had in 200818 yuan.25
(consistent with, or perhaps a result of, the Central Govern-
ment’s e orts to drive investments inland). 2010 saw an additional insurance scheme initiated: a
weather insurance pilot program in Fujian was announced
According to a “Regular Press Conference of the Ministry after a China Insurance Regulatory Commission (CIRC) re-
of Commerce” held in 2010, the number of newly established port detailed a systemic inability to adequately compensate
foreign enterprises in the agriculture, forestry, animal hus- for losses due to natural disasters: “Insurers cover about 30
bandry and shery industries was 929, up by 3.7 percent year- percent of losses from natural disasters in developed countries,
on-year, and the actual utilization of foreign capital amounted but that gure is below 5 percent in China—a country that is
to $1.91 billion, up by 33.8 percent year-on-year. ese new frequently hit by a wide range of natural disasters.”26
enterprises accounted for 3.4 percent of the national total of
newly-established foreign-invested enterprises and 1.8 percent A 2010 CIRC report indicated that agricultural insurance
of total paid-in foreign capital, respectively.19 premiums over the course of 2009 totaled 13.39 billion yuan
in 2009.27
FDI in the agricultural industries has historically focused
on technical cooperation with local producers; the proportion Despite its fast expansion following that original pilot
of foreign investment with an export focus is quite small.19 program, agricultural insurance is still somewhat under-
regulated and potentially problematic. According to an
e trend in agricultural FDI is perceived to be upward, unnamed State Council o cial speaking to China Daily,
however: overcapacity in the manufacturing sector will likely issues include “a lack of continued policy supports and unclear
drive more FDI to the agricultural and service sectors, Asian responsibilities for relevant departments.” Accordingly, the
Development Bank senior economist Zhuang Jian told China State Council’s Legislative O ce issued a draft proposal
Daily in 2009.20 In 2011, China Daily speci ed that the for agricultural insurance regulations in May of 2012. e
98
