Page 88 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
be similar joint ventures, which create a competitive rising labor and land costs in China have forced investors
environment and boost the industry as a whole (Wang to move their manufacturing to cheaper locations in
and Li). Southeast Asia, while developed economies, including
the U.S., have been encouraging their companies to
Premier Li Keqiang told a group of business return to create jobs (Wang, China Tells).
representatives and government leaders in June 2017
that China is ready to further open up and create a globally In September 2017, China accelerated plans to open
competitive business environment, nurturing a level up the financial industry with leading policymakers
playing field for both domestic and foreign businesses. pledging to relax foreign investment rules to counter
“China will further expand market access in the service the decline of capital inflows. The State Council, China’s
and manufacturing sectors, relax restrictions on foreign cabinet, vowed to further reduce market restrictions
ownership, and treat domestic and foreign companies on for foreign companies in the banking, securities and
an equal basis,” Li said, addressing the opening ceremony insurance sectors. “The government’s attitude this time
Summer Davos, in Dalian. The Chinese economy, with its is different from just putting out some vague slogans,”
steady, long-term growth and increasing inclusiveness, said Qu Tianshi, an economist at ANZ Group (also known
will generate more opportunities for other countries, as The Australia and New Zealand Banking Group Ltd.).
and China will remain the most attractive destination The announcement came at a time when inward foreign
for investment, Li said. He said China has achieved investment declined by 1.2 percent between January
better-than-expected results in its efforts to drive mass and July 2017 to 485.4 billion yuan ($74.9 billion)
entrepreneurship and innovation, adding that the compared to the same period in 2016. Economists and
number of market entities of all sizes and types in China analysts stressed that China is better positioned than
increased by a daily average of 40,000 in the past three before to further loosen financial regulations with
years. Li said that overseas investors in China are also stable economic growth, a stronger currency and a
encouraged to invest the profits they earn in the Chinese more sophisticated business environment. “The Chinese
market, though they can also choose to take their profits economy (is now) integrated with the global economy,”
out of the country with no restrictions. Ensuring steady Qu said. “China should have a more open financial sector
employment, the basis for inclusive growth, remains to reflect its economic status and to adapt to the trend
the government’s top priority, he stressed. China has of globalization.” In July, the world’s second biggest
created 13 million jobs every year in the past few years. economy rolled out Bond Connect. The financial link
The registered urban unemployment rate has remained between the Chinese mainland and Hong Kong meant
at around 5 percent. Li said, “Short-term and small that overseas investors could trade for the first time in
fluctuations of economic indicators are unavoidable, mainland bonds without setting up onshore accounts.
but the long-term steady trend for Chinese economic Foreign investors had already been given wider access
development will not change” (Zhang). to the Chinese stock markets in Shanghai and Shenzhen
through the Qualified Foreign Institutional Investor
The State Council, China’s cabinet, said in August (QFII) program. They also gained further entry through
2017 that it would eventually clarify the timetable the RMB Qualified Foreign Institutional Investors (RQFII)
as well as a road map to broaden overseas investors’ scheme between the Chinese mainland and Hong Kong
access to the financial sectors and nine other industries in trading bonds and shares. While major foreign players
— including new-energy car manufacturing, ship have started making inroads into the financial industry,
designing, passenger rail transportation, gas-station their presence remains limited. The assets of foreign
operation, and internet cafes — but still did not specify lenders accounted for less than 2 percent of the total
a date. Foreign investment in most of those industries Chinese banking sector, while foreign insurers only make
is currently restricted, typically with the requirements up about 5 percent of the market share on the mainland.
that a joint venture be set up with a Chinese partner and Chinese policymakers have been walking a tight rope
that the local player should take the controlling stake of between curbing risks and capital outflows with opening
the partnership. Internet cafes, however, are off limits to up the country’s financial markets. “There is no perfect
foreign investors, according to the 2017 version of the timing when it comes to financial liberalization,” Qu, of
“Foreign Investment Industrial Guidance Catalogue.” The ANZ Group, said. “Reforms always come with risks. What
statement followed another document the State Council Chinese policymakers need to do is to strike a balance
issued in January 2017 regarding the boosting of foreign between the two” (Yang, Foreign Financial).
investment, which has slowed in recent years as rapidly
88
be similar joint ventures, which create a competitive rising labor and land costs in China have forced investors
environment and boost the industry as a whole (Wang to move their manufacturing to cheaper locations in
and Li). Southeast Asia, while developed economies, including
the U.S., have been encouraging their companies to
Premier Li Keqiang told a group of business return to create jobs (Wang, China Tells).
representatives and government leaders in June 2017
that China is ready to further open up and create a globally In September 2017, China accelerated plans to open
competitive business environment, nurturing a level up the financial industry with leading policymakers
playing field for both domestic and foreign businesses. pledging to relax foreign investment rules to counter
“China will further expand market access in the service the decline of capital inflows. The State Council, China’s
and manufacturing sectors, relax restrictions on foreign cabinet, vowed to further reduce market restrictions
ownership, and treat domestic and foreign companies on for foreign companies in the banking, securities and
an equal basis,” Li said, addressing the opening ceremony insurance sectors. “The government’s attitude this time
Summer Davos, in Dalian. The Chinese economy, with its is different from just putting out some vague slogans,”
steady, long-term growth and increasing inclusiveness, said Qu Tianshi, an economist at ANZ Group (also known
will generate more opportunities for other countries, as The Australia and New Zealand Banking Group Ltd.).
and China will remain the most attractive destination The announcement came at a time when inward foreign
for investment, Li said. He said China has achieved investment declined by 1.2 percent between January
better-than-expected results in its efforts to drive mass and July 2017 to 485.4 billion yuan ($74.9 billion)
entrepreneurship and innovation, adding that the compared to the same period in 2016. Economists and
number of market entities of all sizes and types in China analysts stressed that China is better positioned than
increased by a daily average of 40,000 in the past three before to further loosen financial regulations with
years. Li said that overseas investors in China are also stable economic growth, a stronger currency and a
encouraged to invest the profits they earn in the Chinese more sophisticated business environment. “The Chinese
market, though they can also choose to take their profits economy (is now) integrated with the global economy,”
out of the country with no restrictions. Ensuring steady Qu said. “China should have a more open financial sector
employment, the basis for inclusive growth, remains to reflect its economic status and to adapt to the trend
the government’s top priority, he stressed. China has of globalization.” In July, the world’s second biggest
created 13 million jobs every year in the past few years. economy rolled out Bond Connect. The financial link
The registered urban unemployment rate has remained between the Chinese mainland and Hong Kong meant
at around 5 percent. Li said, “Short-term and small that overseas investors could trade for the first time in
fluctuations of economic indicators are unavoidable, mainland bonds without setting up onshore accounts.
but the long-term steady trend for Chinese economic Foreign investors had already been given wider access
development will not change” (Zhang). to the Chinese stock markets in Shanghai and Shenzhen
through the Qualified Foreign Institutional Investor
The State Council, China’s cabinet, said in August (QFII) program. They also gained further entry through
2017 that it would eventually clarify the timetable the RMB Qualified Foreign Institutional Investors (RQFII)
as well as a road map to broaden overseas investors’ scheme between the Chinese mainland and Hong Kong
access to the financial sectors and nine other industries in trading bonds and shares. While major foreign players
— including new-energy car manufacturing, ship have started making inroads into the financial industry,
designing, passenger rail transportation, gas-station their presence remains limited. The assets of foreign
operation, and internet cafes — but still did not specify lenders accounted for less than 2 percent of the total
a date. Foreign investment in most of those industries Chinese banking sector, while foreign insurers only make
is currently restricted, typically with the requirements up about 5 percent of the market share on the mainland.
that a joint venture be set up with a Chinese partner and Chinese policymakers have been walking a tight rope
that the local player should take the controlling stake of between curbing risks and capital outflows with opening
the partnership. Internet cafes, however, are off limits to up the country’s financial markets. “There is no perfect
foreign investors, according to the 2017 version of the timing when it comes to financial liberalization,” Qu, of
“Foreign Investment Industrial Guidance Catalogue.” The ANZ Group, said. “Reforms always come with risks. What
statement followed another document the State Council Chinese policymakers need to do is to strike a balance
issued in January 2017 regarding the boosting of foreign between the two” (Yang, Foreign Financial).
investment, which has slowed in recent years as rapidly
88
