China Strives To Further Improve Foreign Investment Environment
China’s MOFCOM (Ministry of Commerce of People’s Republic of China) expressed in a recent press conference that China will continue to improve the environment for foreign capital and will encourage foreign capital investment in high-tech industries and China’s central and western regions.
Latest statistics show that the foreign direct investment (FDI) that flowed into China in June surged 39.6% from a year earlier to $12.51 billion, resulting in a 19.6% year-on-year increase to $51.43 billion during the first half of this year.
The surge, the highest single increase since December 2007, according to industry analysts, reflects how China’s investment climate remains highly attractive in the midst of the global economic slowdown.
During 1H 2010, the service sector clearly outperformed other parts of the economy in absorbing the FDI, accounting for 44.9% of the total volume, up by 38.2% y-o-y. FDI in agriculture, forestry, animal husbandry and the fishery sector was up by 79%.
The Chinese government approved the establishment of over 12,400 foreign-funded enterprises in the first half of 2010, an increase of 18.8% y-o-y. The western region witnessed a rapid increase of 31%, although the volume remains smaller compared with the east and central regions, which comprised 84.3% and 10.8% of total new foreign-funded companies respectively.
During the past two years, the government has been working to reform the foreign investment approval system. The approval procedure for five categories of foreign investment has now been vastly simplified, as the central government has allocated significant approval power to its local counterparts. For foreign investment projects with a total investment amount below $300 million and categorized as “encouraged” or “permitted”, the approval power is now with the local government. Previously, the threshold was at $100 million.
In 2009, the total FDI related approval data items submitted to the central government was reduced by 90% y-o-y. MOFCOM is studying new methods to further improve efficiency of approval such as online approving systems.
The Chinese government has sought to consult foreign companies more on policy making. The government is making relentless efforts to enhance protection of intellectual property rights, an issue of major concern for foreign companies.
In April, China modified draft rules of “indigenous innovation” programs. The revised rules dropped previous requirements that trademarks and brands must first be registered in China to be qualified as “indigenous innovation” and a product must possess technology…
