Yanting Pei and Teresa Huang
In October 2022, with the approval of the State Council, the National Development and Reform Commission, the Ministry of Commerce, the Ministry of Industry and Information Technology, the Ministry of Natural Resources, the Ministry of Ecology and Environment and the Ministry of Transport jointly issued the Notice on Several Policies and Measures for Increasing Foreign Investment, Stabilizing the Stock, and Improving the Quality with a Focus on the Manufacturing Industry (hereinafter referred to as the “Several Policies and Measures”), focusing on solving the outstanding problems faced by foreign-invested enterprises with a view to strengthen the foreign investment promotion and services, and push forward the high-quality development of foreign capital investment.
The Several Policies and Measures consists of three parts and fifteen measures in total. Specifically, the main points include the following:
1. Optimizing the Investment Environment and Expanding the Inflow of Foreign Investments
In terms of investment environment, the Several Policies and Measures put forward six measures of further implementation of negative list for foreign investment access, high-standard implementation of the post-establishment national treatment for foreign investors, promotion of the signing and implementation of foreign-funded projects, strengthening land guarantee, carrying out a series of activities of international industrial investment cooperation, and improving the effectiveness of international investment public service platforms.
These six measures aim to further reduce the restrictions on foreign-invested enterprises when investing, promote foreign-invested enterprises to enjoy equal treatment with domestic enterprises regarding the bidding of some projects, and push forward the implementation of investments in major projects and important industries (e.g. medical, semiconductor, chemical energy).
2. Enhancing Investment Services and Supporting the Development of Foreign-Invested Enterprises
In terms of investment services, the Several Policies and Measures propose five measures so as to solve the outstanding problems faced by foreign-invested enterprises in their current operations, including measures of facilitating international business travel, securing a smooth freight logistics, increasing financial support for foreign-invested enterprises, encouraging foreign-invested enterprises to reinvest their profits and supporting the import and export of foreign-invested enterprises in the manufacturing industry.
Particularly, as to financing, eligible foreign-invested enterprises shall be supported to raise funds through IPO on the Main Board, the STAR Market, the ChiNext Market and the Beijing Stock Exchange, listing on the basic and innovative tiers of the NEEQ, and issuing corporate debenture bonds. The policies such as temporary exemption from withholding income tax for direct investments by foreign investors with distributed profits will also be continuously implemented, which is also a major benefit for enterprises.
3. Guiding the Investment and Improving the Quality of Foreign Investment
In terms of investment sectors, the Several Policies and Measures propose to optimize the structure of foreign investment, support the innovative development of foreign investment, accelerate the green and low-carbon upgrade of foreign investment, and guide the domestic gradient transfer of foreign-invested enterprises in the manufacturing industry. That is, the aim is to encourage foreign-invested enterprises to focus on advanced manufacturing industry and high technology, modern services, energy conservation and environmental protection areas, and encourage foreign-invested enterprises to give priority to the investments in the central and western and northeastern regions.
In general, the Several Policies and Measures reflect the State’s attention and encouragement on foreign investment in the manufacturing industry and also China’s policy on continued expansion of opening up, which helps local government departments to introduce specific favorable policies for foreign investment. It is recommended that enterprises with the need to invest may also pay attention to the local policies before making investment plans.
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