Friday, September 22, 2023

China issues guidelines to attract more foreign investment

China’s State Council (Executive) published guidelines for “to further optimize the foreign investment environment” and “intensify efforts to attract foreign investment” at a time when the post-pandemic recovery of the Chinese economy appears to have slowed.

The guidelines urge “improve the general balance between the national and international situation” and to “promote a world-class business environment that is oriented to the market, based on the law and internationalized”, reads a statement from the Executive published last night on its website.

The Executive asks “to make the most of the advantages of the huge market of China” and “make more efforts to attract and utilize foreign investment and do so more effectively.”

He council of state He cites “guaranteeing national treatment to foreign-invested companies”, “strengthening their protection” and “providing fiscal and tax support” as some of the aspects in which efforts are needed.

The reduction of sectors or activities banned or restricted to foreign investment has been in recent years one of the battlefields of foreign companies present in China, especially European and American ones.

Those companies, along with their governments or EU institutions, have complained to Beijing about the lack of reciprocity in the access of companies to their respective marketsgiven that Chinese firms enjoy subsidies and much more freedom to operate, invest in or buy entities from their territories.

After a promising start to the year, the post-pandemic recovery of the Chinese economy shows signs of slowing down, growing less than expected in the second quarter (+6.3% year-on-year).

The low national demand and international, deflation risks and insufficient stimuli, together with a real estate crisis that has not bottomed out and a lack of confidence in the private sector are the main causes that analysts put forward to explain what is happening in the world’s second largest economy.

In addition, in recent months, the reform of the Anti-Espionage Law, which includes “collaboration with spy organizations and their agents” in the category of espionage, and the investigations launched against foreign consultancies in China have sown concern in the sector and in potential foreign investors.


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