Foreign investment in high-end, high-tech and green manufacturing industries can help upgrade industrial structure and promote supply-side structural economic reform, both of which are pressing economic bottlenecks, says Zhang Jianping 张建平 Ministry of Commerce Regional Economic Research Center director, West Asia and Africa Regional Office director. He made these comments in an explanation of the reasons and timing of the many policy documents released by State Council and MofCOM to relax market access for foreign investors.

Additionally, Luo Yuze 罗雨泽 Development Research Center of the State Council Economic Research General Office director says possible drivers of these policies are

  • slowdown and decline in Chinese foreign investment in 2016
  • attempts to better utilise skilled, experienced and highly educated human resources through employment in China
  • need to forge an open and fair business environment to help Chinese enterprises Going Global

The policy context can be seen from three perspectives, says Hao Hongmei 郝红梅 Ministry of Commerce Institute of Foreign Investment deputy director, which include

  • internationally, trade protectionism and increasing competition are emerging; China needs to adapt to higher standards of international investment rules to attract foreign investment
  • domestically, the economy is facing industrial structure upgrading and supply-side structural reform, both of which will require technology input from foreign investment
  • push for trade liberalisation is crucial at a time of rising waves of anti-globalisation

Despite progress, Luo points out persisting and emerging problems hindering the process of opening up, including

  • existence of a ‘glass door’ or ‘spring door’, as foreign firms face restrictions despite market access
  • lack of effective protection of intellectual property rights
  • need for more simplified approval systems in certain industries
  • restrictions on cross-border capital flow
  • the ‘one size fits all’ feature of policies lacks consideration of special circumstances
  • arbitrary legal enforcement and lack of established norms

Problems can be solved through integrating laws governing domestic and foreign investors, strengthening intellectual property rights protection, and continuously lowering barriers for foreign investment in life services and strategic industries, argues Zhang.

A long-term perspective on inspiring passion and maintaining confidence of continuous foreign investment should be taken says Zhang. Moreover, the relationship between bringing in and Going Global should be well managed and utilised, Zhang argues, noting this will require

  • speeding up scaling up the negative list management model for foreign investment
  • promoting replication of FTZs and best practices
  • promoting bilateral investment agreements settlement and signing of double taxation agreements, offering protection mechanisms for foreign investment

The focus is to continue improving investment environment, concludes Hao. Specifically, this involves

  • further opening up market access
    • deepening FTZ reform in accordance with international standards of market access model
    • conducting scientific evaluation of the existing negative list for foreign investment
    • investing in professional and technical resources to eliminate barriers and unnecessary industry protection
  • continuing reform
    • promoting full implementation of the 20 measures for attracting foreign investment
    • scaling up the best practices of FTZs reform
    • speeding up transforming government functions, innovate administrative management system and improve the efficiency of administration
  • pushing for legal reform
    • speeding up the legislative process of Foreign Investment Law
    • speeding up multilateral and bilateral investment agreement negotiations
    • maintaining high-level investment relations with dominant economies in a global investment regime