Foreign Investment in China

Phillipe E. Snel

Since 2004, Philippe is permanently established in Shanghai and has assisted numerous foreign investors to establish, develop and operate their businesses in China. Philippe mainly advises in the fields of corporate law, compliance and technology transfer.

This month, the Chinese Ministry of Commerce issued the ‘Circular on Centering on Building a New Development Pattern and Effectively Stabilizing Foreign Investment’ in order to further stabilize and improve the structure and quality of foreign investment, and to better handle foreign investment matters in 2021.
The Circular proposes 22 specific measures, divided into five categories.

1. To expand the high level of opening-up and attract more foreign investment

Measures will be taken to further apply the pre-established national treatment plus negative list system to foreign investors (2020 version) and the Catalogue of Industries for Encouraging Foreign Investment (2020 version).
Alongside attracting more foreign investment in advanced manufacturing, high-tech technologies, energy-saving and environmental protection industries and emerging industries, measures to attract more world-class foreign talent will be taken.
Later on, the “Fourteenth Five-Year Plan for Utilizing Foreign Investment Development” will be released.

2. To promote the development of opening-up platforms

Actions will be taken to improve the opening-up platforms, for example in various free trade zones. The opening up of the service industry will be expanded to establish a cluster of pilot areas for trade-in services. Also, the national economic development zones will be upgraded, and the development level of cross-border combined zones and regional open development will be promoted.

Furthermore, strategic measures will we implemented for large scale development and foreign investment in Central, Western and North-eastern China.

3. To intensify the attraction for foreign investment and integration of international and domestic industrial chains

To increase investment in the industrial chain and promote the integration of international and domestic industrial chains by making full use of digital innovations such as video conferencing and enhancing various exhibitions platforms.

Commerce authorities will establish closer contact with countries such as Japan, Korea, Singapore, the UK, the Netherlands and Denmark to promote and support multilateral and bilateral investments.

4. To improve the service system for foreign investment

Measures will be taken to improve the foreign investment service guarantee system to solve commonly faced problems, to increase the protection of foreign investment, and to make good use of special funds for foreign economic and trade development.

5. To promote the reform of “Delegating Power, Improving Regulations, and Upgrading Services” and continue to optimize the environment for foreign investment

In ways such as implementing the Foreign Investment Law and its supporting regulations, improving the foreign investment reporting management system, implementing the Measures for Security Review of Foreign Investment and updating the Foreign Investment Guide and the Invest in China website.

Foreign investment

Together with these 22 measures, China has revised some legislations to provide a better legal environment for foreign investment and with the signing of trade deals like the RCEP and CAI China continues to be an attractive destination for foreign investment.

If you have any questions about this subject, please feel free to contact us.