China scraps rules for foreign firms
Further opening measures expected, says former official
China has abolished administrative rules for approval and management of representative offices of foreign companies, saying that the move is aimed at ensuring an open and fair business environment for foreign enterprises.
The move comes after complaints from foreign enterprises and business associations that China has not delivered on long-standing promises of more openness and a fairer market, and it was announced just weeks before the upcoming 19th National Congress of the Communist Party of China (CPC), so further concrete measures are probably coming, a former top official and other experts said.
The Ministry of Commerce (MOFCOM) said in a document on Monday that it has scrapped administrative rules for the establishment and management of representative offices of foreign companies in China. The decision was approved on August 21 and went into effect on September 14.
The move, ordered by the State Council, China’s cabinet, will “continue to deepen reforms in streamlining administration, delegating power and optimizing services,” MOFCOM said in the document, which was signed by Minister of Commerce Zhong Shan.
The administrative rules, first introduced in 1995, required foreign companies to apply for official approval when setting up representative offices in China and to reapply two months before the expiry of the initial permit, which could only last for a maximum of three years.
The rules have often been cited by foreign companies and business associations when complaining about market conditions in China, according to media reports. Experts said that by getting rid of such highly criticized measures, China is showing that it’s acting on its promise of a more open and fair market.
“This is a huge change,” said Wei Jianguo, deputy director of the China Center for International Economic Exchanges and a former vice minister of MOFCOM.
More actions to come
“This is also a signal that [the Chinese economy] will be more open after the 19th CPC National Congress,” Wei told the Global Times on Wednesday. The 19th CPC National Congress is scheduled to convene in Beijing on October 18.
Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, said that the Chinese government has been very “active” in recent months regarding improving market conditions and attracting foreign investment.
On its official WeChat account, MOFCOM has published four articles and statements regarding market opening reforms and foreign investment just this week.
One article published on Wednesday pointed out that since mid July, top Chinese leaders have repeatedly stressed the need to improve market conditions for foreign companies and attract foreign investment.
“The signals are getting stronger,” the article read.
“The statements on foreign investment undoubtedly demonstrate to the world China’s firm belief in opening up [its economy],” it said.
The article also said that there have been two policy documents on market opening and foreign investment issued by the State Council so far this year.
“So putting all this together and considering the timing of it [before the 19th CPC National Congress], I think that there is a very clear message we want to send out: China is determined to pursue economic reforms and opening-up and we are ready to take specific actions,” Bai told the Global Times on Wednesday.
Bai noted that foreign companies and business associations might have been frustrated with the pace of China’s opening reforms because “we are crossing the river by feeling the stones,” a phrase famously used by the late leader Deng Xiaoping.
“But now that we have felt the stones, we need to cross the river,” Bai said.
He noted that inaction could hinder China’s ability to attract foreign investment and hold back the upgrading of its manufacturing sector and economy.
In the first eight months of 2017, foreign direct investment into China declined by 0.2 percent year-on-year to 547.94 billion yuan ($83 billion), according to data released by MOFCOM on September 14.
“This is also a signal that [the Chinese economy] will be more open after the 19th CPC National Congress.” Wei Jianguo, Former vice minister of MOFCOM