Foreign Investment Opportunities Expand in 2017

On January 17,  the State Council released the full version of Circular of the State Council on Several Measures Concerning Further Openness and Active Utilization of Foreign Investment (the Circular). The Circular aims to promote further openness, ensure fair competition in the market, and to attract foreign investment, addressing many aspects that concern our members in USITO. Key points include further openness in telecoms and Internet sectors, abolishing the threshold for minimum registered capital of foreign-invested companies, allowing local governments to set up incentive programs for foreign enterprises, strategic policies like "China Manufacturing 2025" applying to foreign-invested enterprises equally, and other positive measures for foreign investment in China. 

Please find details on market access, foreign investment, free trade zone, fair competition, standardization, government procurement, and IPR from the Circular itself and two readouts, one by MOFCOM and GAC, and another one by NDRC below.

Market Access:
- Revising the "Catalog of Industries for Guiding Foreign Investment" and relevant policies and regulations to further loosen access restrictions on foreign companies in services, manufacturing, and mining
- In the service industry, the focus is on loosening access restrictions on foreign investment in finance industry and pushing openness on telecommunications, Internet, culture, education and transportation sectors in an orderly fashion
- "China Manufacturing 2025" applies to domestic and foreign invested enterprises equally. Encourage foreign investment in high-end manufacturing, intelligent manufacturing, green manufacturing to upgrade and improve traditional industries
- Support foreign investors to participate in the construction of infrastructure by means of franchise, including energy, transportation, water resources, environmental protection and public projects

Foreign Investment:
- Support domestic and foreign-invested enterprises and research institutes in research & development. Under the reciprocity principle, allow foreign-invested enterprises to undertake the projects under the national S&T programs. Incentive programs including additional tax deductions over the R&D spending of enterprises, and those for hi-tech enterprises and for R&D centers apply equally to foreign-invested enterprises
- Unless otherwise specified in laws and administrative regulations, abolish the threshold for minimum registered capital of foreign-invested companies, and ensure unified registered capital rule equally binding on domestic and foreign-invested enterprises
- Within its power, local governments are allowed to develop incentive programs to attract more investment on projects contributing to employment, economic development and technological innovation, reduce the investment and operational cost of enterprises, and protect the rights and interests of foreign-invested enterprises
- Support the allocation of land for foreign-invested projects. Relevant land use policy equally applies to foreign-invested enterprises and domestic enterprises
- Push the foreign investment management model of pre-establishment national treatment and negative list to be in force, and simplify the management procedures for establishment and change of foreign-invested enterprises

Free Trade Zone:
- Continue to set up free trade zones, and promote and copy the successful practices to more regions. Use FTZ as the experiment on sensitive sectors, and expand the openness nationwide if the risk proves to be manageable

Fair Competition: 
- Governments at all level shall strictly implement and enforce the State's policies and regulations, ensure the consistency in enforcing policies and regulations, and shall not impose unapproved restrictions on foreign-invested enterprises
- Unless otherwise specified in laws and regulations or unless the provision of information to foreign investors is deemed necessary, the departments concerned shall examine the foreign-invested enterprises' business license and qualification applications according to unified criteria and timeframe, and ensure domestic and foreign-invested enterprises are treated equally and compete on an equal footing

- Work to ensure domestic and foreign-invested enterprises participate in China's standardization work on an equal footing. Further deepen the reform of standardization work, and make the standards development/revision process more transparent and highly open

Government Procurement:
- Adhere to the principles of openness, transparency and fair competition, ensure the products manufactured by foreign-invested enterprises within China are treated equally and non-discriminatory, per laws and regulations, and work to ensure domestic and foreign-invested enterprises participate equally in government procurement process

- Strictly protect intellectual property rights of foreign-invested enterprises according to laws and regulations. Enhance the IPR-related enforcement, Build a mechanism for cooperating with foreign governments/entities in terms of IPR, and work to ensure relevant international organizations set up IPR arbitration & mediation branches in China

This is a very positive move to start out 2017. We will continue to monitor and push all followup actions and measures with relevant departments to see this circular in action.