YOUR
Search

    28.10.2022

    China issues new policies to encourage foreign investment in manufacturing


    On 13th October 2022, days before the opening of the 20th Chinese Communist Party Congress in Beijing, six ministry-level agencies in China, respectively the National Development and Reform Commission, the Ministry of Commerce, the Ministry of Industry and Information Technology, the Ministry of Natural Resources, the Ministry of Ecology and Environment, and the Ministry of Transport and Communications, have issued the “Several Policy Measures on Promoting, Attracting, Stabilising and Enhancing Manufacturing-oriented Foreign investments” (the “Policies”). The Policies were reported by mainstream media in China on 25 October 2022, just after the conclusion of the Party congress.

     

    The Policies are worded in broad terms and provide for an overall direction and outlook, rather than specific rules to be directly enforced. At the same time, the fact that they have been promulgated jointly by six of the main central government authorities, and the timing of their promulgation and of the subsequent media reports, make them particularly significant.

     

    Below is a summary of their contents.

     

    Part One: Optimising Investment Environment and Expanding the Flow of Foreign Investment

    (1) The Policies call for relevant government bodies to clear up any restrictive measure that may hinder foreign investments beyond that provided by the Negative List 2021 edition. The Negative List is a list of industries in which foreign investment is prohibited or restricted. It is regularly updated, and in recent years it has been perceivably reduced on a regular basis. In its 2021 edition, it includes 31 items that are regarded as specially sensitive.

    (2) Government authorities are requested to implement national treatment and to ensure that foreign invested business enjoy equal support policies in terms of national industrial development and regional development, according to laws and regulations, and that they enjoy equal treatment in acquisition of production factors, qualification, licensing, intellectual property protection, establishment of standards, tendering, bidding, and government procurement.

    (3) Major foreign investment projects must receive full support in terms of project land use, environmental assessment, planning, energy consumption etc., so that these projects can fully play out their leading and driving role.

    (4) Local government authorities will have to enhance their support to foreign investment projects by strengthening their services in relation to land use, environmental protection, logistics, entry to and exit from China, etc.

    (5) Local authorities will have to follow carefully planning and land factors in relation to foreign investment projects. This point presumably wishes to address the issue of local authorities permitting the establishment of polluting plants in areas that were subsequently re-zoned, so that plants had to be relocated, sometimes repeatedly.

    (6) Local authorities will have to enhance their cooperation activities through dialogue with the foreign investment enterprises, as well as the Chambers of Commerce and international organisations. Chinese authorities must host major fairs and exhibitions, strengthen their information services, invite multinationals to invest in China and carry out investment promotion activities with special attention to key industrial sectors such as healthcare, semiconductors, chemicals and energy.

    Part Two: Strengthening Services and Support for Foreign Investment

    (7) Subject to sound COVID-19 prevention and control measure, local authorities must facilitate the entry and exit of personnel involved in foreign investment projects as well as their family members. Procedures should be simple, should be clearly communicated, and whenever possible convenience should be provided for foreigners to come to China.

    (8) Ministries and provinces must coordinate between epidemic prevention and smooth logistics so as to promote safety and stability of supply chains. All local authorities must take initiative to approach foreign traders and enterprises, as well as their upstream and downstream affiliated enterprises, to ensure smooth transports.

    (9) High quality financial services and financial support should be available to qualified foreign invested enterprises. Banks and financial institution must innovate their products and services, subject to legal compliance and controllable risks. Qualified foreign investment enterprises should be supported to raise funds by listing on the various available stock exchanges.

    (10) Foreign invested enterprises will be granted the same supporting policies for reinvestment as those for new foreign investment. All local authorities are free to introduce preferential policies for attracting foreign investment within the scope of their statutory authority, aiming at encouraging foreign investment enterprises to reinvest in the manufacturing industry in China, and reduce the investment and operating costs of enterprises.

    (11) Within the scope of the Regional Comprehensive Economic Partnership agreement (RCEP, free trade agreement among the Asia-Pacific nations of Australia, Brunei, Cambodia, China, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam), local authorities are encouraged to build public service platforms. Efforts should be made to introduce trade facilitation policies, and provide manufacturing foreign investment enterprises with services and guidance on free-trade agreements, custom clearance, export control and trade remedies.

    Part Three: Guiding and Improving Foreign Investment

    (12) Foreign investors are specifically encouraged to invest in:

    - high-end equipment, basic components, key parts etc., for advanced and high-technology manufacturing;

    - R&D and design, modern logistics etc with respect to modern service industry; and

    - new energy, green and low carbon key technology, innovation etc with respect to energy conservation and environmental protection.

    In addition, manufacturing enterprises will be given support in China’s central and western regions and north-eastern areas.

    (13) All local authorities should make a special effort to support the innovation and development in foreign investment, guide foreign invested research and development centres to make good use of import duty policies to support scientific and technological innovation, further simplify the procedures for any required approval, optimise work processes, encourage foreign investors to establish research and development centres in China.

    (14) Local authorities should guide foreign investors to take an active part in green and low carbon upgrading, carbon neutrality, and green manufacturing and green technologies. Foreign investment enterprises will be encouraged to participate in the establishment and amendment of Chinese industry standards in green and low carbon sectors on an equal footing with local enterprises. Foreign invested enterprises will be encouraged to be trendsetters in energy efficiency and water efficiency.

    (15) Government authorities should plan and organise activities such as local trips by multinationals, with a focus on inviting and promoting foreign multinationals in the manufacturing sector to develop in the central and western regions and the north-eastern area of China on a priority basis. National new district and development zones in the central in the western region in northern area should continue to be supported.

    All competent departments and local authorities must engage in attracting new foreign investment, stabilizing existing investment and improving quality, optimizing the policy environment and boosting investors’ confidence, promoting quality development, supporting foreign investment enterprises in their integration in the Chinese market.

     

     

     

    This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For any further information please contact Hermes Pazzaglini

    China Labour Guide
    This memorandum outlines the principal regulations governing employment relation…
    Read more
    China Data Protectionv Report 2024
    This short guide will help you navigate through the data security management laws and regulations of the People’s Republic of China (“PRC”). Click here for the entire document
    Read more
    China Company Law Reform
    On 29 December 2023, the seventh session of the Standing Committee of the fourteenth National People’s Congress adopted a reformed Company Law of the People’s Republic of China, which will come into effect…
    Read more
    China issues new policies to encourage foreign investment in manufacturing
    On 13th October 2022, days before the opening of the 20th Chinese Communist Party Congress in Beijing, six ministry-level agencies in China, respectively the National Development and Reform Commission, the…
    Read more
    China data protection report - update october 2022
    At the following link you can find the memorandum “China Data Protection Report 2022”, an in-depth analysis of the new rules on the processing of personal data in China through an explanation of the main l…
    Read more
    New "Antimonopoly Law of the People's Republic of China"
    On June 24, 2022, the Standing Committee of the National People's Congress published the final version of the "Antimonopoly Law of the People's Republic of China" ("Antimonopoly Law") (中华人民共和国反垄断法), which …
    Read more
    Memorandum on the Chinese GDPR – The new “Personal Information Protection Law”. Implications and consequences
    Introduction The recent legislative activity in the People’s Republic of China regarding the protection of personal data has attracted the attention not only of operators in the sector but also of the d…
    Read more
    New Regulatory Framework for Foreign Investments in China
    On 31 December 2019, the State Council (the Chinese central government) published the Implementation Regulations of the Foreign Investment Law (中华人民共和国外商投资法实施条例), with almost immediate entry into force (i.…
    Read more