Foreign Investment a Focal Point for China’s 2020 Two Sessions Congressional Event

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Maintaining and shoring up foreign investment levels has emerged as one of the key focal points of China’s recently concluded 2020 Two Sessions congressional meetings at the end of May.

The 2020 Government Work Report delivered by Premier Li Keqiang at the start of the Two Sessions made reference to the need to “actively use foreign capital, greatly reduce the foreign investment negative list and unveil cross-border services and trade negative lists”

It also called for “conferring greater independence control over reform and opening to free trade pilot zones, and operating a market environment that treats domestic and foreign invested enterprises independently and provides free competition.”

On 25 May Chinese commerce minister Zhong Shan (钟山) called for “stabilising foreign trade and foreign capital,” including stabilisation of foreign trade, expansion of foreign investment growth, and stabilisation of existing foreign investment.

Zhu Surong (朱苏荣), head of the Shenyang branch of the Chinese central bank and rep­re­sen­ta­tive at the National People’s Congress (NPC), submitted a bill during the Two Sessions which called for “dele­tion of sep­a­rate pro­vi­sions for for­eign-in­vested banks, Sino-for­eign joint-ven­ture banks and for­eign bank branches,” as well as “fur­ther ex­pan­sion of fi­nan­cial open­ing and ex­pe­dit­ing fair mar­ket com­pe­ti­tion.”

Xia Jun (夏俊), managing partner at EY China, said to International Financial News (国际金融报) said that opening of domestic markets was a “fundamental state policy” for China.

As one of the world’s most impotent investment destinations, China’s stable political environment, huge market, skilled labour, mature industry chains, continually improving infrastructure and increasingly advanced management concepts are all very hard to replace.

China’s open stance, international vision and professional government services provide comprehensive advantages for optimising commercial environments and providing service guarantees, and make it more likely that foreign-invested enterprises will be likely to come.

According to Xia China is encouraging more foreign investment in areas such as advanced manufacturing, emerging industries, tech, clean energy and environmental protection, as its industrial structure shifts from low-value added, energy intensive and pollution intensive sectors to high-value added, low-energy intensity and low-pollution sectors.

Xia expects the foreign investment negative list to be greatly reduced, as well as foresees significant simplification of regulatory procedures for foreign invested enterprises.

Over the past three years China’s foreign investment negative list has shrunk from 93 items to just 40, while further reductions are expected to take place with a focus on services, manufacturing and agriculture.

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