The central government released the good news to foreign investor before the Spring Festival as “Circular of the State Council on Several Measures concerning the Expansion of Opening-up and Active Use of Foreign Capital (hereinafter was referred as ‘the Notice’)”. Shanghai Dongjin finds the main points as below.

Background

It is learnt from the official statistics of Ministry of Commerce, since Year 2014, there is the great decline on the actual use of foreign capital, compared with that of Year 2013. Although there was a little increasing in the Year 2015 but there was not any increasing in the following year. It was found by the China government that the development of the Foreign Direct Investment (“FDI”) was slow down. On the other hand, there was more foreign exchange moving out China than moving in China and CNY was depreciated. Thus, since the late half year of 2016, the government started to issue new rules on FDI and simplified it from the approval requirement to the filing-recording. Now, the state council further issues the Notice to expand the China Market and save the cost for FDI matter.

There are the following three kinds of measures.

Further to Expand and Open-up the China Market and to Change the Catalogue for the Guidance of Foreign Investment Industries, the following industries are to be opened up.

1. Service industry: the bank, the security, the insurance, the fund management companies, the futures companies will be further open to the foreign investor.
2. Some sensitive industries as the telecom, the internet, the culture and the education industries will be open to the foreign investor step by step.

Further to Create a Fair Market

1. The government is NOT allowed to put the restriction on the foreign investment at its own discretion.
2. The requirement of foreign invested enterprises’ (“FIEs”) application for the qualification should be the same as that of the local companies.
3. The FIEs can fairly join in the standardization work.
4. The FIEs can fairly join in the government’s procurement.
5. The Intellectual Property Rights of FIEs should strongly be protected.
6. The environment, channel and requirement for financing should be fair to the FIEs.
7. The registered capital policies should be the same as that for the local companies and FIEs.

Further to Attract the Foreign Investment

1. The Notice give the power to the local government and it is allowed to issue the local favorable policy to attract foreign investment within its legal power prescribed by the law.
2. It is encouraged that the relocation of WOFE to the EAST-NORTH or WEST of China and it is applicable to the favorable company profit tax policy.
3. The encouraged foreign investment industrial program is applicable to the favorable land policies as that for the local companies.
4. The foreign debt policies are to be changed the same as that for local companies.

Shanghai Dongjin will keep a close eye on the detailed open-up policies as well as the favorable policies in the near future.

If you have any questions, please send the email to me.

Ms. Jojo Hu           

TEL: 0086-21-68868335 ext 324 / FAX: 0086-21-68868021

Email: jojohu@shanghaiinvest.com