China Will Relax Measures on Foreign Investment in High Tech and Green Industry

March 3
7:57 AM 2016

Spokeperson for China's Commerce Ministry Shen Danyang on Wednesday said that China will lower threshold for foreign investment. China aim to attract more investment in the country to increase foreign direct investment.

China continued to become world's top destination for investment, according to survey conducted by the United Nations Conference on Trade and Development. Most investors planned to invest in China in 2016 and 2017. For 2015, China attracted 781.4 billion yuan ($126.3 billion) in non-financial direct investment, a 6.4% increase from 2014.

In order to attract more investors, China will lower the entry barrier for foreign investors, and speed up the revision of relevant laws and regulation. One of which is to reform China's state-owned enterprises (SOE) through mergers and acquisitions. China will invite foreign investment to participate in reforming its state-owned enterprises.

"We support foreign participation in China's SOE reforms," Shen Danyang told Shanghai Daily"Considering China's limited capacity in handling various resources, the move by some foreign companies taking over SOEs can help in activating the market vitality and facilitating the SOE reforms."

Shen believed foreign investment can help the state-owned enterprise to apply better management techniques and enhance the competitiveness of Chinese companies.

Merger and acquisitions is an important model for foreign direct investment. On a global scale, 38% of last year's global investments were conducted through merger and acquisition, a 61% increase from a year earlier.

In China, 14.9% of last year's foreign investment at the amount of $17.8 billion, were spent to take over China's SOE. Shen said the proportion is still small, "It is normal and the proportion is much lower than the global average of 38%. We don't consider it a wave of foreign merger and acquisitions of Chinese SOEs."

According to Xinhua, Shen also said that current regulations on foreign investment is one of the target to be revised. Commerce Ministry will submit Investment Law to the National People's Congress for deliberation. As China will encourage more foreign investment to help the its on-going economic transformation.

The new law on foreign investment will relax more measures on foreign investment. Especially for high-tech, green and environmental protection industries, and services sectors.

Furthermore, as reported by China Daily, China also calls for an end to improper anti-dumping practice. China's Ministry of Commerce specifically asked European Union (EU) and members of the World Trade Organization (WTO) to stop using the analogue country system in anti-dumping reviews on China's exports. As the system use production costs in the third country to define the normal value of exports from a non-market economy.

China continued its effort to attract more foreign investment in the country. The second world-largest economy prepare to lower threshold for foreign investment, and advance revision on relevant regulation on foreign investment.

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