China embracing more EU businesses
Country is working hard on fostering a robust environment in which foreign enterprises can thrive on equal terms
Since my mandate as China’s ambassador to the European Union started six months ago, China’s business environment has been a frequent topic of my conversations with European friends. Many are asking what China’s business environment is like and whether it will keep improving. I would like to share my views on that.
Unquestionably, China is very attractive to foreign investors. For years, it has outperformed many other developing countries in terms of foreign direct investment inflows and actual utilization. In 2017, despite a decline in global FDI flows, more than 35,000 foreign-invested companies were newly established in China, up by 27.8 percent year-on-year. China also utilized $136.3 billion (116.5 billion euros; £102 billion) of foreign capital, hitting a record high and making itself the second-largest FDI destination, second only to the United States.
As of January, the EU’s FDI stock in China had exceeded $120 billion, and the EU had invested in nearly 45,000 projects in the country. Surveys show that over 50 percent of EU companies plan to further expand their operations in China. According to the World Bank’s flagship annual report, Doing Business 2018, China is ranked 18 places higher than five years ago in terms of ease of doing business. Its score is higher than the average for East Asia and the Pacific economies and higher than most major emerging economies.
These figures speak for themselves. Investors are voting through their actions in favor of China. The country’s efforts have proved effective in easing market access, strengthening rule of law and providing better services. Specifically, the highlights of our work in the past five years are:
• We have revised the Law on Chinese-Foreign Joint Ventures, as well as other laws and regulations related to foreign investment, with the aim of fostering a more transparent, fairer and wellconceived legal environment.
• We have expanded market access to such sectors as new energy vehicles, securities and insurance, as well as significantly cut restrictive measures on foreign investment, and given foreign enterprises equal access to Made in China 2025 policies.
• We have made business registration easier for foreign investors by canceling or delegating more than one-third of items subject to State Council review and approval.
• We have worked vigorously to step up intellectual property rights protection and level the playing field.
• We have been advancing pilot free trade zones in a holistic way to create more opportunities for foreign companies.
However, China is still a developing country. For a country at such a stage of development, some issues related to the business environment are understandable. Yet we are determined to address them in the course of reform and opening-up. At this year’s annual sessions of the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference, the government promised to strengthen alignment with international business rules and foster a world-class business environment. Specifically, our efforts will include — but not be limited to — the following:
• We will completely open up the general manufacturing sector and expand access to sectors like telecommunications, medical services and new energy vehicles.
• We will ease or lift restrictions on the share of foreign-owned equity in companies in sectors including banking, securities and futures, and make market entry standards the same for both Chinese and foreign banks.
• We will grant overseas investors tax deferral for the reinvestment of profits made in China.
• We will simplify procedures for setting up foreign-invested enterprises, apply practices developed in pilot free trade zones across the country and explore opening free trade ports.
As we celebrate the 40th anniversary of China’s reform and opening-up, we stand ready to take new and bigger steps to offer a world-class business environment that is more equitable, transparent and predictable.