The State Council issued “The Circular on the Several Measures to Boost the Growth of Foreign Investment” (Guo Fa (2017) No. 39) hereinafter is referred to “the Circular”) on 8^th August 2017. Twenty two policies in five aspects are taken out to promote the growth of foreign investment. Shanghai Dongjin finds the below as main points.

1. Further to reduce market access restrictions for foreign capital:

• To fully implement the pre-entry national treatment and the negative list administrative system to national wide;
• To expand market access to allow foreign capital to enter certain sectors, such as the manufacturing of special purpose vehicles and new-energy vehicles, business premises for internet services, banking sector, securities sector, and insurance sector and etc;

2. To make fiscal and taxation support policies:

• Foreign investors are encouraged to expand their investment scale in China, and profits obtained by foreign investors from resident enterprises within the territory of China but directly reinvested by them in encouraged investment projects will be entitled to the tax deferral policy, meaning that these profits are exempted from the withholding tax temporarily, provided that relevant requirements are fulfilled;

3. To optimize the investment environment:

• To improve the legal system for foreign investment;
• To guarantee foreign investors' freedom to transfer their profits overseas;
• To provide better protection of intellectual property rights owned by foreign-invested companies;
• To ensure the stability of the laws and regulations for foreign investment;

4. To provide the convenience for the entry and exit for the foreign talents;
5. To improve all-around investment environment in national-level development zones.

Dongjin Comments:

1. It is the hard time for the China domestic economy and China government had less financial income. With such background, the China government pays more attention on the foreign investment;
2. The manufacturing sectors in China met the bottleneck. Chinese manufacturing companies want cooperate with to foreign investors and introduce their advanced technology;
3. It is also required to improve the service quality in the service sectors in China. China government wants to introduce the high-end and modern service idea and method of the foreign investors into China;
4. China is still a huge consuming market and there are many potential business chances for high-end manufacturing sectors and service sectors.

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