Page 84 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
Keqiang, approved a new guideline to further attract yuan under the capital account”. “(We will) further improve
foreign investment and advance China’s opening-up. the yuan’s role for investment, financial transactions and
Foreign investment access hurdles were dropped in as a reserve currency, and promote the opening of the
a number of manufacturing sectors under the new domestic market,” it said. Analysts said the focus of the
guideline including rail transportation, motorbikes central bank’s promise on yuan convertibility will be on
and ethanol fuels. Foreign capital will have access to attracting foreign investors into the country’s financial
fields like energy, water conservancy, environmental markets rather than allowing domestic money to move
protection and utilities via franchise agreements. “China’s overseas, given the current pressure on capital outflows.
economy develops as we continue our opening-up “The opening this year [2017] will mainly be to open the
strategy. Besides advanced technology and experience stock and bond markets to foreign investors, with the
in management, China also needs capital investment target initially being institutional investors… (especially)
from overseas,” Li said. The catalog for industrial access long-term investors such as pension funds,” Lu Zhengwei,
for foreign investors also would be amended to match a Shanghai-based economist with Industrial Bank Co., Ltd..
the new measures. Foreign capital is now encouraged to Looser controls over money leaving the country will be
enter high-end manufacturing, as well as related services, “possible” down the road because the yuan must be fully
such as industrial design and logistics. Accounting and convertible before it can truly become an international
auditing, architecture design, and rating services would currency; however, it will be “very difficult” in the near
be open to foreign investment for the first time. Foreign- future because of concerns that lifting limits will lead to
funded companies would be cleared to join the national further capital flight, Lu said (Wang, China Signals).
science and technology program as equals with domestic
companies, and enjoy favorable policies under the Ministry of Commerce Spokesman Sun Jiwen said
Made in China 2025 strategy. The guideline emphasizes the government has been expanding efforts to further
equal treatment for foreign investors, and no additional open up high-end manufacturing to foreign investment.
restrictions are allowed. The new guideline highlights Sun’s comments follow recent remarks made by German
consistency in policies designed to attract foreign Economy Minister Brigitte Zypries that China’s foreign
investment. Better protection of intellectual property investment limits went against its position on free
rights for investors is also covered. The government international trade. Sun said absorbing foreign investment
would work to make it easier for foreign investors and was an important part of China’s opening-up policy. He
experts to live and work in China. Foreign investment said the government had striven to open the market
in the “encouraged categories” in central and western more to foreign investors in accordance with World Trade
areas would even receive financing, land and taxation Organization rules. According to data from the Ministry,
incentives. Foreign investment is vital for China’s economic foreign direct investment totaled $41.6 billion in the first
transformation and structural adjustment, according to four months of 2017, a year-on-year drop of 0.1 percent.
Chen Fengying, a researcher in global economies at the During the same period, 9,726 internationally funded
China Institute of Contemporary International Relations. companies were established across the country, up 17.2
China, which now is encouraging foreign investments percent from the same period in 2016. In addition to
to move into high-end, low-carbon and sustainable the manufacturing sector, new guidelines are expected
industries, can improve the business environment and to offer more foreign investment access to the services
lower market access barriers by introducing negative sector and the mining industry, and reduce the number
lists and granting multinational companies national of restrictive measures from 93 to 62 (Jing).
treatment. Negative lists include only those activities
that are off-limits in a sector, and all other activities are Zhou Xiaochuan, Governor of the PBOC, said further
considered open (Zhang and Hu). opening up helps to build a strong and competitive
financial sector in China. Zhou said this in a June 2017
By March 2017, China’s central bank pledged to speech in Shanghai that protectionism hurts China’s
open the country’s financial markets further to foreign financial sector. Protectionism and protectionist
investors as part of government efforts to strengthen behavior limiting the participation of foreign players
the yuan’s international role and encourage capital in China would lead to laziness and weakness, and will
inflows. The PBOC said in a statement on its website lead to weak competitiveness, hurting the industry’s
that authorities will deepen reform of the exchange rate development. “Protectionism ... will lead to unhealthy
regime and “steadily push forward the convertibility of the and unstable markets and institutions”, he said. “Looking
84
Keqiang, approved a new guideline to further attract yuan under the capital account”. “(We will) further improve
foreign investment and advance China’s opening-up. the yuan’s role for investment, financial transactions and
Foreign investment access hurdles were dropped in as a reserve currency, and promote the opening of the
a number of manufacturing sectors under the new domestic market,” it said. Analysts said the focus of the
guideline including rail transportation, motorbikes central bank’s promise on yuan convertibility will be on
and ethanol fuels. Foreign capital will have access to attracting foreign investors into the country’s financial
fields like energy, water conservancy, environmental markets rather than allowing domestic money to move
protection and utilities via franchise agreements. “China’s overseas, given the current pressure on capital outflows.
economy develops as we continue our opening-up “The opening this year [2017] will mainly be to open the
strategy. Besides advanced technology and experience stock and bond markets to foreign investors, with the
in management, China also needs capital investment target initially being institutional investors… (especially)
from overseas,” Li said. The catalog for industrial access long-term investors such as pension funds,” Lu Zhengwei,
for foreign investors also would be amended to match a Shanghai-based economist with Industrial Bank Co., Ltd..
the new measures. Foreign capital is now encouraged to Looser controls over money leaving the country will be
enter high-end manufacturing, as well as related services, “possible” down the road because the yuan must be fully
such as industrial design and logistics. Accounting and convertible before it can truly become an international
auditing, architecture design, and rating services would currency; however, it will be “very difficult” in the near
be open to foreign investment for the first time. Foreign- future because of concerns that lifting limits will lead to
funded companies would be cleared to join the national further capital flight, Lu said (Wang, China Signals).
science and technology program as equals with domestic
companies, and enjoy favorable policies under the Ministry of Commerce Spokesman Sun Jiwen said
Made in China 2025 strategy. The guideline emphasizes the government has been expanding efforts to further
equal treatment for foreign investors, and no additional open up high-end manufacturing to foreign investment.
restrictions are allowed. The new guideline highlights Sun’s comments follow recent remarks made by German
consistency in policies designed to attract foreign Economy Minister Brigitte Zypries that China’s foreign
investment. Better protection of intellectual property investment limits went against its position on free
rights for investors is also covered. The government international trade. Sun said absorbing foreign investment
would work to make it easier for foreign investors and was an important part of China’s opening-up policy. He
experts to live and work in China. Foreign investment said the government had striven to open the market
in the “encouraged categories” in central and western more to foreign investors in accordance with World Trade
areas would even receive financing, land and taxation Organization rules. According to data from the Ministry,
incentives. Foreign investment is vital for China’s economic foreign direct investment totaled $41.6 billion in the first
transformation and structural adjustment, according to four months of 2017, a year-on-year drop of 0.1 percent.
Chen Fengying, a researcher in global economies at the During the same period, 9,726 internationally funded
China Institute of Contemporary International Relations. companies were established across the country, up 17.2
China, which now is encouraging foreign investments percent from the same period in 2016. In addition to
to move into high-end, low-carbon and sustainable the manufacturing sector, new guidelines are expected
industries, can improve the business environment and to offer more foreign investment access to the services
lower market access barriers by introducing negative sector and the mining industry, and reduce the number
lists and granting multinational companies national of restrictive measures from 93 to 62 (Jing).
treatment. Negative lists include only those activities
that are off-limits in a sector, and all other activities are Zhou Xiaochuan, Governor of the PBOC, said further
considered open (Zhang and Hu). opening up helps to build a strong and competitive
financial sector in China. Zhou said this in a June 2017
By March 2017, China’s central bank pledged to speech in Shanghai that protectionism hurts China’s
open the country’s financial markets further to foreign financial sector. Protectionism and protectionist
investors as part of government efforts to strengthen behavior limiting the participation of foreign players
the yuan’s international role and encourage capital in China would lead to laziness and weakness, and will
inflows. The PBOC said in a statement on its website lead to weak competitiveness, hurting the industry’s
that authorities will deepen reform of the exchange rate development. “Protectionism ... will lead to unhealthy
regime and “steadily push forward the convertibility of the and unstable markets and institutions”, he said. “Looking
84
