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Govt aims to boost foreign investment

By Xu Wei | China Daily | Updated: 2023-08-30 08:39


Incentives hope to make companies more confident as economy recovers

Beijing has ramped up efforts to increase the inflow of foreign investment with the rollout of 24 policy measures this month, pledging to beef up support for foreign investors' research and development in China and ensure their equal participation in government procurement activities.

Business leaders and industry analysts said the measures, released by the State Council in a policy document on Aug 13, have given foreign businesses a timely boost in confidence and will serve as incentives for them to expand their operations in China.

Key measures include giving more support to foreign businesses in sectors such as advanced manufacturing, modern services and the digital economy by helping them collaborate with vocational schools to address labor shortages and encouraging eligible foreign investors to set up their companies domestically.

To ensure that foreign businesses are offered the same treatment as their Chinese counterparts, the government will seek to expedite an amendment to the Law on Government Procurement, which will make it easier for foreign businesses to obtain government contracts for their products by further clarifying the specific standards for products manufactured in China.

Cases where foreign companies claim to be receiving unfair treatment will be investigated, and these businesses can file complaints to financial departments at various levels if they believe government procurement activities have harmed their interests.

"I believe foreign investors and foreign-invested enterprises can feel reassured that these policy measures show the commitment from the Chinese government to boost opening-up, and they can fully enjoy the incentives," said Chen Chunjiang, assistant minister of commerce.

He told a news conference on Aug 14 that the ministry is working with relevant departments to continue shortening the negative list for foreign investment and expanding market access for foreign investors.

The nation will also relax restrictions and offer wider market access for foreign investors who make strategic investments in publicly listed companies by revising relevant regulations.

The policy measures came after China's actual use of foreign investment dropped 4 percent year-on-year in the first seven months of 2023 to 766.7 billion yuan ($105.2 billion).

However, the number of newly established foreign businesses in China grew 34 percent year-on-year during the period, while foreign direct investment in the high-tech manufacturing sector increased 25.3 percent.

Zhang Qi, head of the research department of foreign economic relations at the Development Research Center of the State Council, said the release of the policy measures is timely as the global economy is dealing with a sluggish recovery and cross-border investments remain lackluster.

Against this backdrop, the rollout of the policy measures will help multinational companies become more confident in conducting long-term operations in China and contribute to the recovery of global cross-border investments, she said.

She explained that one of the measures' key goals is to place more emphasis on encouraging foreign businesses' R&D in China.

"Such measures will strengthen China's innovation climate and offer concrete opportunities for multinationals to take part in China's opening-up and innovation drive," she said.

To scale up the protection of the rights and interests of foreign-invested enterprises, the government pledged crackdowns on those who disseminate false and harmful information against foreign businesses online, as well as efforts to improve the administrative adjudication system for patent infringement disputes.

IPR infringements against foreign businesses will be the focal point of law enforcement activities, and the government will establish a rapid-response mechanism to handle cases and enhance protection efforts.

Another major highlight of the policy document is the freeing up of investments in the pharmaceutical industry in China, which has the second-largest drug market in the world.

In the document, the government pledges to encourage foreign businesses to conduct clinical trials of cell and gene therapy drugs that are already listed overseas, and optimize application procedures for the registration of drugs transferred from overseas production to domestic production.

Policy praised

The measures came as global pharmaceutical companies have already launched moves to beef up their presence in the Chinese market.

Last month, Moderna Inc, a company based in the United States, said it would push forward with producing messenger RNA vaccines for China. This month, AstraZeneca PLC, based in the United Kingdom, signed an agreement to cooperate with a Chinese company to work on mRNA technology.

Zhang said she believes the latest measures marked a breakthrough in China's healthcare sector and will help multinationals expedite their efforts to bring the production of leading products to China, and open up a huge market.

The government's pledge to establish channels for eligible foreign enterprises who need to move data across borders rapidly is another area of interest, Zhang said, as it will lead the way for relevant institutional innovation and help these companies conduct business in their branches around the world.

In a statement released after the policy document's publication, the European Union Chamber of Commerce in China said the latest measures "could go a long way to improving business confidence if they are implemented in a timely, coordinated and consistent manner".

The chamber said it welcomed the announcement that foreign companies should be given fair access to procurement opportunities in China, adding that it is also positive that the State Council has announced that requirements for goods and services "produced in China", a common requirement for government procurement contracts, be clarified.

It added that the preferential tax policies announced in the document could have an immediate impact on business confidence.

According to the document, foreign businesses will be encouraged to reinvest the profits they make from operations in China through tax incentives, and expatriates in China will receive subsidies for housing, language training and education for their children.

Paul Zhu, president of Tetra Pak Greater China, said the document will help solidify the company's long-term commitment to the Chinese market.

He said the company welcomes the policy to encourage joint R&D efforts and the industrial application of technologies between foreign companies and their domestic counterparts, which is in alignment with the company's strategy of co-innovation with customers and the industry in China.

"China is one of our most important markets globally, and our commitment to the Chinese market has been unwavering as we have been a direct witness to and beneficiary of the nation's reform and opening-up process," he added.

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