The General Office of the State Council recently issued the "Action Plan for Solidly Promoting High-Level Opening-Up and Attracting and Using Foreign Investment with Greater Effort" (hereinafter referred to as the "Action Plan"). At a regular policy briefing held by the State Council Information Office, officials from relevant departments interpreted the "Action Plan".

Pragmatic Measures to Attract Foreign Investment

Wu Hao, Secretary-General of the National Development and Reform Commission, said that in recent years, the Chinese government has continuously increased its efforts to open up, introduced a series of policies and measures to stabilize foreign investment, and optimized the environment for foreign investment. "The introduction of the 'Action Plan' once again shows our high regard for attracting foreign investment, and our commitment to enhancing benign interaction with the world economy through high-level opening-up, and taking tangible actions to bolster the confidence of overseas investors in investing in China." According to Wu Hao, the "Action Plan" employs pragmatic measures in expanding market access, facilitating the flow of innovative factors, and aligning with international high-standard economic and trade rules to more vigorously attract foreign investment.

Further Expanding the Space for Foreign Investment. The "Action Plan" proposes to expand market access and improve the level of liberalization of foreign investment. A new version of the negative list for foreign investment access will be introduced, further reducing restrictions on foreign investment access, and pilot programs for access will be launched in areas of great interest to foreign enterprises such as healthcare and value-added telecommunications. At the same time, more qualified foreign institutions will be supported to conduct operations in sectors like banking, insurance, and bonds funds.

Further Optimizing the Business Environment. The "Action Plan" proposes to optimize the level of competition on a level playing field, focusing on services to foreign-invested enterprises. Efforts will be made to implement relevant policies effectively, issuing fair competition review regulations in the field of public tendering and bidding, and addressing issues such as local protectionism and ownership discrimination; government procurement standards for domestic products will be issued, requiring equal treatment of products produced by domestic and foreign-funded enterprises that meet the standards in government procurement activities.

Further Enhancing the Convenience of Cross-Border Flow of Factors. In terms of the movement of business personnel, the visa entry validity for management and technical personnel of foreign-funded enterprises, as well as their accompanying spouses and minor children, will be extended to 2 years, and convenience will be provided for foreign talents working, staying, and gaining permanent residence in China. In terms of data flow, the secure and orderly cross-border transfer of data related to research and development, production, and sales of foreign-funded enterprises will be promoted, and data transfer standards in the Guangdong-Hong Kong-Macao Greater Bay Area will be formulated to enable convenient data flow within the Bay Area.

Expanding the Catalogue of Industries for Encouraging Foreign Investment

The Catalogue of Industries for Encouraging Foreign Investment is a foreign investment promotion policy clearly stated in the Foreign Investment Law and its implementation regulations, encouraging and guiding foreign investors to invest in specific industries, fields, and regions, the current version being that of 2022. The "Action Plan" also specifies the expansion of the Catalogue of Industries for Encouraging Foreign Investment and the list of foreign investment projects.

"According to this year's government work report, the National Development and Reform Commission, in conjunction with relevant departments, has already started the revision of the Catalogue of Industries for Encouraging Foreign Investment," said Hua Zhong, who is in charge of the Commission's Foreign Investment and Overseas Investment Department. Preliminary considerations for revision focus on two main aspects:

The national catalogue revision will continue to encourage foreign investment in manufacturing as the main direction, while promoting the integrated development of the service and manufacturing industries, and increasing support for advanced manufacturing, modern services, high technology, and environmental protection sectors. Multinational companies are welcome to continue to expand investments in related fields in China, engage in deep cooperation with upstream and downstream enterprises, and achieve mutual benefit, win-win outcomes, and common development.

The revision of the catalogue for the central and western regions will fully exploit the local resource endowments and industrial conditions, tailoring increased support for basic manufacturing, applicable technology, and consumer-related sectors based on regional characteristics. With the development environment of the central, western, and northeastern regions continuously improving, rich in resources, vast markets, and abundant talent, global multinational companies are welcomed to focus more on these areas and to expand their business layout there.

Investing in China is Investing in the Future

Last year, the scale of foreign capital utilized by China has seen a decrease. Wu Hao analyzed that the current issue of the scale of foreign capital utilization in China can be viewed from three dimensions.

From a global perspective, it is normal for global cross-border investment to rise and fall. In recent years, the world has become more chaotic, the global economic situation has grown more complex, and the fluctuations in global cross-border investment have increased. In 2021, after scaling up to a higher level, there was a continuous decline. In January this year, the United Nations Conference on Trade and Development's "Global Investment Trend Monitor" showed that after excluding the factors related to transnational enterprises' investment through intermediary locations, there was an 18% reduction in global cross-border investment in 2023. Under such circumstances, China has maintained a good posture in attracting foreign investment.

Over a longer time frame, the actual use of foreign capital in China in 2023 is still at a historical high. Although there was some fluctuation in the scale of foreign capital attracted by China in 2023, a more objective conclusion can be drawn from both the "quantity" and "quality" aspects. In terms of quantity, China's actual use of foreign capital last year exceeded 1.1 trillion yuan, the third-highest on record. In terms of quality, the structure of China's use of foreign capital has continued to improve, with the share of capital attracted to high-tech industries reaching 37.4% in 2023, up 1.3 percentage points from 2022; and the share of capital attracted to the manufacturing sector reaching 27.9%, an increase of 1.6 percentage points.

Looking at future trends, China's advantages in attracting foreign investment are significant and the space for it is vast. China is the world's largest market with the most growth potential, and it will continue to release huge demand in advanced manufacturing, new urbanization, consumption upgrading, and other areas. At the same time, China has a good and stable policy environment, the most complete industrial system in the world, and can provide a high-efficiency, high-reliability industrial support system for foreign investment. China's increasingly complete infrastructure network, sufficient talent resources, and rich innovation application scenarios, etc., can create a good investment space for foreign businesses in new technologies, new industries, and new business formats.

"We believe that for multinational companies, walking with China is walking with opportunities, and investing in China is investing in the future," said Wu Hao. The National Development and Reform Commission will work with regions and departments to solidly promote high-level opening-up. (Reporter Liao Ruiling)