Bloomberg Businessweek - USA (2019-05-27)

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1978.Foreigninvestmentprojectsare
subjecttoadministrativeapprovaland
normallyenjoypreferentialtreatment,
whichhasgivenforeigninvestorsan
edgeovertheirdomesticpeers.

Afterit joinedtheWorldTrade
Organizationin2001,Chinafocusedon
developingitslegalsysteminlinewith
internationalstandards,andthelawsand
regulationsonforeigninvestmentwere
amendedsubstantially.Still,thereare
inconsistenciesbetweenthethreeexist-
inglaws—whichwillbereplacedbythe
ForeignInvestmentLaw—andotherlaws,
suchastheCompanyLaw.

Sincetheglobalfinancialcrisisin 2008,
theUnitedStatesandotherdeveloped
countrieshaveacceleratednegotiations
onfree-tradeagreementsandcreated
newrulesofglobaltradeandinvestment.
Chinaaimstorestructureitsdomestic
economicsystemandcreatenewdriving
forcesthrougha higherlevelofopening
up,asitseconomyhasshiftedfromhigh-
speedtohigh-qualitygrowth.

Anewroundofopeningupstartedin
2013,focusingonestablishingpilotfree-
tradezones(FTZs).TheChina(Shanghai)
PilotFTZwasfoundedthatyear,andChina
begantoexplorea pre-establishmentna-
tionaltreatmentplusnegativelistsystem
formanagingforeigninvestment.Aftera
negativelist—whichspecifies thesectors
off-limitstoforeigninvestors—wasimple-
mentedintheShanghaiFTZ,relevantlaws
onforeigninvestmentmanagementwere
suspendedinthezonefora three-year
trialperiod.

In2016,thepre-establishmentnational
treatmentplusnegativelistsystemwas
expandedacrossChinabasedonthe
experienceofpilotFTZsandtrialreforms.
Thatsameyear,theMinistryofCommerce
(MOFCOM)issuedinterimpoliciesspecify-
ingthatforeign-fundedenterprisesno
longerneedapprovaltoinvestinareasnot
designatedinthenegativelist.

InJune2018,a shortenednegativelist
forforeigninvestmentcameintoeffect,
containingjust 48 items,downfrom 63
inthepreviousversion.Thenewnegative
list,knownastheSpecialAdministrative
MeasuresonAccesstoForeign
Investment,wasjointlyreleasedby
MOFCOMandtheNationalDevelopment
andReformCommission.

InNovember2018,ChinesePresidentXi
JinpinggavehisassuranceattheFirstChina
InternationalImportExpoin Shanghaithat
Chinawillspeedupnewforeigninvest-
mentlegislation,fullyimplementthepre-
establishmentnationaltreatmentplus

negativelistsystemanddevelopa world-

classbusinessenvironment.

AsChinais shiftingthefocusofitsopen-

ingupfromtheflowof goodsandfactors

ofproductiontorulesandinstitutions,the

case-by-caseapprovalsystemfailstomeet

theneedsofthenewopeneconomicsys-

temandwideropeningup.Thereis a need

fora morefavorablelegalenvironmentfor

institutionalopenness.Thenewlawmeets

thatneed,creatinga moretransparent,

stableandpredictablepolicyenvironment

forforeigninvestors.

DoingbusinessinChina

Globaldirectinvestmenthasshrunkwith

theriseoftradeandinvestmentpro-

tectionism.China’soriginaladvantages

forattractinginvestmenthavebeen

weakenedbytherisingcostofdomestic

laborandotherfactors.Therearealso

higherdemandsonChina’sinvestment

environment,suchasopeningupmore

sectors,treatingforeigninvestorsonpar

withdomesticenterprises,strengthen-

ingprotectionofintellectualproperty

rightsandbanningforcedtechnology

transfer.

Facedwiththeseconsiderations,China

hasbeencommittedtofollowinginterna-

tionalstandards,enhancinggovernment

services,streamliningapprovalprocedures

andimprovingitsbusinessenvironment.

China’srankingintheWorldBank’sDoing

Business 2019 report’sease-of-doing-

businessindeximprovedto 46 lastyear,

from 78 in2017.Againstthesharpdecline

inglobaldirectinvestment,Chinamain-

tainedsteadygrowth,withthepaid-in

amountreachinga recordhighof$134.

billion.

In2018,Singaporeaccountedfor53.

percentoftheChinesemainland’stotal

foreigninvestment,anincreaseof10.

percentfroma yearearlier.Theinvest-

mentprimarilywenttoindustrialparks,

includingdemonstrationprojectssuchas

theSuzhouIndustrialParkinEastChina’s

coastalJiangsuProvincethatbeganasa

bilateralprojectwithSingapore,andthe

China-SingaporeTianjinEco-cityinNorth

China.Besidescapital,Singaporealso

exportsadvancedmanagementexpertise

toChina.InvestmentfromEuropean

Unioncountriesmaintainedrapidgrowth:

In2018,theirinvestmentamountedto

$11.86billion,up 35 percentfrom2017.

TheadoptionoftheForeignInvestment

LawreflectsChina’sresolveto widen

openingupandprovidea morefair,

openandinstitutionalizedbusinessen-

vironmentbasedontheruleoflawfor

long-termdevelopmentofforeign-fund-

edenterprises.Notably,it willpromote

utilizationofpremiumoverseascapital,

technologiesandprofessionalsona

largerscale,andgive

fullplaytoresources

fromthedomesticand

internationalmarkets

toensuresteady

growthofforeign

investment. ■

[email protected]

FOREIGN DIRECT INVESTMENT INTO CHINA

IN RECENTYEARS

(Source: Ministry of Commerce)

45.

92.

119.

126.27 126.

131.04 134.

1998 2008 2014 2015 2016 2017 2018

Unit: US$ billion