China today liberalised rules of entry for foreign firms and announced new measures for them to access its domestic vast market, making a fresh pitch for FDI to reinvigorate the world’s second largest economy amid continued slowdown.
Except for certain sensitive industries, foreign direct investment will now only require registration, rather than administrative approval, an official statement after central cabinet meeting chaired by Premier Li Keqiang said.
Details on the working of the new system will be released online by the Ministry of Commerce (MOC), state-run Xinhua news agency reported.
Foreign companies will submit applications online and receive a response within three days.
That is to say, as long as their business is not on a “negative list”, foreign investors will only need to deliver business plans to local regulators, the report said.
The government estimates that this means over 95 per cent less procedures. The practice has been tested in various pilot free trade zones.
“A negative list for foreign investment, initiated by Shanghai pilot free trade zone in October 2013, will now be rolled out nationwide, which marks an end of an era dominated by administrative approvals,” Ye Lin, professor of Renmin University of China Law School was quoted as saying by the report.
“The move goes in line with foreign investors’ anticipation of a wider opening Chinese market so as to further share the bonus of the country’s growth,” said Gmw.cn analyst Xie Weifeng.
A report by the US-China Business Council found 90 per cent of US businesses operating in China were profitable in 2015, up from 85 per cent in 2014.
Despite an economic slowdown, China remains an attractive destination for foreign companies with an improving business environment.
Foreign direct investment (FDI) in China during the first eight months of 2016 increased 4.5 per cent year-on-year to USD 85.9 billion, MOC said.
Altogether, 18,538 new foreign-funded businesses were established in the same period, up 10.2 per cent from a year earlier.
FDI inflows have grown steadily since 1978 when China began reform and opening-up, but remained relatively low in the 1980s.
Former Chinese leader Deng Xiaoping’s tour of the southern province of Guangdong in early 1992 brought a massive wave of FDI, lifting inflows to over USD 45 billion by 1997-1998.
In 2001, China joined the World Trade Organization and FDI inflows have more than doubled since.
Hit by slowdown, China’s economy grew 6.7 per cent in the second quarter of the year, the lowest quarterly growth rate since the global financial crisis in early 2009, but still within the government’s target range of 6.5-7 per cent for 2016.