China has recently released an announcement on foreign investment titled,“State Council Rules Regarding the Further Utilization of Foreign Investment.”It states:
China will open more fields to foreign investors and encourage them to invest in high-end manufacturing; the high-tech industry; the modern service sector; and fields involving new energy, environmental-protection and energy efficiency.
Projects concerning industries that are characterized as having high energy-consumption, high resource-consumption and as causing pollution will be strictly restricted along with projects that have low or surplus production levels.
The government will provide easier access to land for projects that conserve land; the projects may purchase land at a price no less than 70% of the industry standard.
Cooperation between Chinese enterprises and their foreign counterparts on research and development is encouraged. Qualified foreign investors are encouraged to jointly apply for national science and technology development projects and innovation capacity-building projects with Chinese enterprises or research institutions.
Transnational companies are encouraged to base their headquarters and centers for research and development (R&D), purchasing, financial management, accounting, and their other functional centers in China. Those commodities concerning the development of science and technology imported by foreign-invested R&D centers will be exempt from import tariffs, value-added tax and consumption tax.
Foreign investors are encouraged to develop labor-intensive industries which have reached China's environmental-protection requirements in central and western China.
China will encourage shareholding and acquisition by foreign enterprises. Foreign enterprises are invited to invest in domestically listed companies and will be allowed to raise money in China. They will also be able to issue shares, corporate bonds and medium-term notes and to request loans from financial institutes.
The announcement has been welcomed by the American Chamber of Commerce in the People’s Republic of China (AmCham-China).“Deepening China's ability to draw on capital markets is a positive element mentioned in this announcement that has great potential,” AmCham-China President Christian Murck said.“We look forward to seeing the implementation of these regulations to better understand how China plans to introduce these changes.”
AmCham-China believes that this announcement is a promising sign for the relationship between the government and foreign companies invested in China.“Coming on the heels of the Ministry of Science and Technology’s new draft regulations regarding indigenous innovation, which is now open for public comment, this indicates a trend of productive engagement,”Mr. Murck said.
