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Catalogue for Guidance of Foreign Investment Revised

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Shanghai Free Trade Zone officially launched the pilot project of outbound tourism for wholly foreign owned travel agencies in September. Wan Cheng (Shanghai) Travel Services Co., Ltd was approved as the first wholly foreign owned travel agency to manage outbound tourism. “We are optimistic about the prospects of China’s tourism market, and see China’s efforts to accelerate the pace of opening to the outside world,” company manager said.

Since the 18TH National Congress of the Communist Party of China (CPC), China has accelerated the establishment of an open economy and strive to create a legalized, facilitated international investment environment and cultivate new advantages of international competition. Meanwhile, the Chinese government continue to expand market access for foreign investors by introducing a series of policy initiatives and achieved positive results.

First, the speedy construction of free trade pilot zone opens wider the door of opening up. Free trade area construction undertakes the role in pioneering new approaches to opening up. From the year of 2013, Shanghai Free Trade Zone has made it a priority to ease the investment boundary for foreign investors. The first negative list of foreign investment of free trade zone starts with 190 restrictions, and later gradually “weight reducing” to only 95 now. “In the future, we will have to implement the negative list that has been tried in the free trade zone across the country to create a better investment environment for foreign-funded enterprises,” said the relevant personnel in charge of the Ministry of Commerce.

In April this year, China’s new Liaoning Free Trade Pilot Zone and 6 other places have been established officially and started to operate. At present, the total number of national free trade pilot zones has reached 11, forming a comprehensive pattern of innovation in the all-around system.

Second, to further reduce the restrictions, China revised the “catalogue for guidance of foreign investment”. According to the spokesperson of National Development and Reform Commission, they have revised the catalogue twice in 3 years. The 2015 edition of the catalog reduced the restrictive measures to 93 from 180 in 2011 edition, and the 2017 edition will further reduce the restrictions to 63, curtailing 65 percent compared to 2011 edition.

Notably, the 2017 edition of the catalog also absorbs the inventory management experience of the previous free trade pilot area and negative list model, bringing the implementation of a national-wide negative list of foreign investment and expanding the access the foreign investment by adopting the record management besides the list.

“The new catalog is of great significance to enhance China’s expansion of foreign investment and the use of foreign capital.” Li Dawei, associate researcher of Institute of Foreign Economics of China Macroeconomics Research Institute said, the new catalogue expands the scope of market access and is conducive to further improving the environment of foreign investment in China.

Third, we will ease the market access threshold for services and manufacturing, and give foreign investment greater display space in China. At present, the opening level of China's service industry, manufacturing industry and mining industry has been greatly improved, and the general manufacturing industry has been basically released.

Foreign companies have the most right to evaluate China's investment environment. Jia Dianan, chief representative of Baker & McKenzie International Law Firm, said that China has eased restrictions on foreign investment through a series of pragmatic initiatives, especially to ease the market access threshold for services and manufacturing. The ratio of foreign shares investment has been increased to ensure that foreign companies have more investment opportunities.

A more opened China has won the world’s praise and recognition. The World Bank’s new released “2017 Global Business Environment Report” shows that China’s investment environment has risen compared with last year, with China’s business investment convenience jumping 18 places worldwide in the past three years, increasing an average of 6 places per year. The 2017 World Competitiveness Report released by the Lausanne School of Management in Switzerland shows that China has significantly improved its performance in terms of economic performance and government efficiency and business efficiency.

In the context of the current decrease in global foreign capital flows and the intensification of international capital competition, China's actual use of foreign investment in the first eight months of this year was 547.94 billion yuan, which was basically stable year-on-year. At the same time, quality continued to improve, with the actual use of foreign capital in high-tech manufacturing increased by 15 percent year-on-year, while the actual use of high-tech services increased by 21.4 percent year-on-year.

Zhan xiaoning, director of the investment and enterprise division of UNCTAD, believes that China's opening up to foreign investment will be further expanded with the deepening reform of China's foreign capital management system. This will inject new impetus into the inflow of foreign capital, and China will remain one of the most attractive investment destinations for foreign investment.

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