On 17 January 2017, the State Council released the Circular on Several Measures on Expanding the Opening to and Active Use of Foreign Investment (国务院关于扩大对外开放积极利用外资若干措施的通知)(Guidelines). The Guidelines set out the blueprint for China's policies on attracting foreign investment in the upcoming years.
According to the latest statistics from the Ministry of Commerce (MOFCOM), foreign direct investment in China recorded a growth of 4.1 percent in 2016. Although the investment amount has continued to increase each year, the growth rate has declined. The rising costs of production in China amidst the global economic slowdown have driven many investors from China to other emerging markets. Against this background, the Guidelines are generally seen as the central government's revived attempt to attract foreign investment by calling on various ministries to take concrete action to implement the principles set out in the Guidelines.
The Guidelines provide high-level guiding principles which include the following:
China will focus on liberalisation of the following sectors to foreign investment: financial sectors, such as banks, securities companies, fund management companies, futures companies, insurance firms and insurance agencies; accounting and auditing services, architecture design and credit-rating services; manufacturing sectors, such as manufacturing of rail transportation equipment and motorcycles, edible fats and oils processing and production of fuel ethanol; unconventional oil and gas production, such as development of shale deposits and shale gas; and for Sino-foreign cooperative projects of oil and gas exploration, the current approval regime will be replaced by a record-filing system. Most of the above changes have already been reflected in the latest draft of the revised Foreign Investment Industry Catalogue/外商投资产业指导目录(修订稿), which was issued in December 2016 (please refer to our earlier legal update " China Plans to Revise the Foreign Investment Catalogue" for details).
China will seek to open up to foreign investment, in an "orderly way", sensitive areas such as telecommunications, education, internet, culture industry, transportation. Foreign-invested enterprises (FIEs) will enjoy favourable policies designed for the "Made in China 2025" strategy. In particular, foreign investment is encouraged in the following sectors to help upgrade traditional industries: high-end manufacturing, intelligent...