State Council to Endorse the Use of Foreign Investment

Friday, 22 June 2018 16:00

The State Council has recently issued the Circular on Several Measures Concerning the Active and Effective Use of Foreign Investment to Boost High-quality Economic Growth (the "Circular"). Shanghai Dongjin finds the below main points for this Circular.

  1. Extensively relaxing the market access to boost the freedom in investment
  • The new negative list will have two sections, one for nationwide implementation and one for pilot free trade zones, shall be updated and announced by July 1, 2018.
  • The mechanism regarding qualified overseas investors will be expanded to encourage overseas investors to participate in the futures trading of crude oil and iron ore and give more support to foreign-invested financial institutions in underwriting local government bonds.
  • Restrictions on energy, resources, infrastructure, transportation, commerce circulation, and professional services will be removed or loosened in the upcoming list.
  • It was decided to cancel or ease the restrictions on foreign investment in such manufacturing sectors as automobiles, shipping vessels, and aircraft.
  1. Deepening the reform of "streamlining administration, delegating power and strengthening regulation, and improving services" to make it more convenient to seek investment.
  • Provincial governments will be delegated the authority over the setting up or business alteration of foreign-invested enterprises with total investment of US$1 billion or less.
  • The filing requirements in the pilot program will be relaxed for eligible multinational companies to have greater flexibility in managing their foreign currency capital in China.
  • The permitting procedures for foreign talent to work in China will be simplified, and eligible foreign employees hired by enterprises registered in China will be able to get their visas to work in China within two work
  1. Stepping up efforts to facilitate investment and increase the quality and level of investment introduced into China.
  • It is clearly stated that foreign investors are encouraged to make investment through mergers and acquisitions.
  • Greater policy support regarding credit lines, land use, and social security will be rolled out to help reduce business costs.
  1. Providing better safeguards for investment to create high-standard investment environment.
  • Legitimate interests of foreign investors will be better protected. No forced technology transfer will ever be imposed on foreign-invested enterprises. All infringements, counterfeiting, commercial secret violations and trademark squatting will be severely dealt with. The ceiling of compensation for intellectual property infringements will be significantly raised.
  1. Optimizing the layout of regional opening-up to guide foreign investment to areas such as central and western regions.
  • Foreign investors will be encouraged to invest more in the central and western regions and in such sectors as modern agriculture, ecological preservation, advanced manufacturing, and modern services.
  1. Driving the innovation-oriented upgrading of national-level development zones and maximizing the significant platform role of the utilization of foreign investment.
  • Development zones at national levels will be encouraged to serve as an important platform to lead efforts in better absorbing foreign investment.

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Mr. Mike Chang

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