The "Foreign Investment Law (Draft)" was announced

In order to further expand opening up, promote foreign investment and protect the legitimate rights and interests of foreign investment. On December 26, 2018, the "Foreign Investment Law (Draft)" was officially announced, and the foreign investment promotion mechanism was further established and improved. This article will list some of the main contents of the "Foreign Investment Law (Draft)":Investment Promotion:1. Except as otherwise provided by laws and administrative regulations, the state's policies supporting enterprise development are equally applicable to foreign-invested enterprises.2. In accordance with the needs of national economic and social development, the State adopts preferential measures to encourage and guide foreign investors to invest in specific industries, fields and regions.3. The State guarantees that Foreign-funded Enterprises participate in government procurement activities fairly. Government procurement is treated equally according to the products produced by foreign-invested enterprises in China.Investment Protection:1. The foreign investor's capital contribution, profits, capital gains, intellectual property rights, and compensation according to law may be freely transferred in RMB or foreign exchange according to law.2. The State protects the intellectual property rights of foreign investors and foreign-invested enterprises in accordance with the law, protects the legitimate, and encourages the implementation of technical cooperation on voluntary principles and business rules.

The White Paper for Foreign Investment Environment

In 2017, the actual use of foreign capital in various industries in the country reached US$136.32 billion, a year-on-year increase of 2%. Among them, the actual use of foreign capital in the non-financial sector was US$131.04 billion, ranking second in the world, and further improving the quality and level，play an important role for the national economy and social development.In 2017, 35,652 new Foreign-funded Enterprises were established nationwide, a substantial increase of 27.8% year-on-year, an increase of 22.8 percentage points over the previous year. In the past five years, the number of new non-financial Foreign-funded Enterprises in China has increased year by year. From 2013 to 2017, the number of new enterprises was 22,773, 23,778, 26,575, 27,900 and 35,652 respectively.Among them, in 2017, 4,986 new Foreign-funded Enterprises were established in the manufacturing industry, up 24.3% year-on-year; the actual use of foreign capital was US$33.51 billion, down 5.6% year-on-year, accounting for 25.8% of the national total. Among them, computer, communications and other electronic equipment manufacturing industry actually used foreign capital of 5.9 billion US dollars, an increase of 2.6%; electrical machinery and equipment manufacturing industry actually used foreign capital of 3.05 billion US dollars, an increase of 1.2%; general equipment manufacturing industry actually used foreign capital 2.89 billion US dollars. fell by 0.6% year-on-year. The above three industries accounted for 35.4% of the total foreign direct investment in the manufacturing industry.5,990 new Foreign-funded Enterprises in the high-tech service sector, up 81.9% year-on-year, actual use of foreign capital 260.7 billion dollars, an increase of 106.4%. Information services added 3,392 new enterprises, up 102.6% year-on-year, and actual use of foreign capital was US$20.97 billion, up 146.5% year-on-year. There were 32 new enterprises in e-commerce services, and the actual use of foreign capital was US$170 million, up 88.8% year-on-year. The actual use of foreign investment in R&D and design services was US$ 1.45 billion, up 3.2% year-on-year.In 2017, there were 1032 new Foreign-funded Enterprises in China's high-tech manufacturing sector, up 29.3% year-on-year, and actual use of foreign capital was US$9.89 billion, up 7.6% year-on-year. The actual use of foreign capital in the six branches of high-tech manufacturing increased year-on-year. Among them, the electronics and communication equipment manufacturing industry accounted for the largest foreign investment in high-tech manufacturing, accounting for 64.7%, reaching US$6.4 billion, up 4.5% year-on-year; Pharmaceutical Manufacturing Industry utilized foreign capital of 2.14 billion US dollars, up 1.8% year-on-year; medical equipment and instrumentation manufacturing industry utilized foreign capital of 870 million US dollars, up 23.1% year-on-year; computer and office equipment manufacturing industry utilized foreign investment of 370 million US dollars, up 65.7% year-on-year; aviation, spacecraft and equipment manufacturing industry experienced the fastest year-on-year growth, with foreign investment of US$80 million, up 110.2% year-on-year; information chemical manufacturing industry utilized US$0.4 billion, up 737.4% year-on-year, the largest increase.In 2017, the Chinese government substantially relaxed foreign investment access, increased the protection of foreign rights, improved the investment business environment, and encouraged foreign investors to continue to invest in China for a long time. The scale of foreign capital utilization was steadily increasing, and the quality and level were steadily improved.

Innovation in Guangdong FTZ: new high ground of China’s opening-up

Roughly a thousand years ago, during the Song Dynasty (960–1279), Guangdong Province was among the first to promote international trade, leading China's opening-up without even realizing. Thanks to its favorable commercial policies and fair business environment, merchants and delegations from over 50 countries came to Guangdong to establish their businesses, making it one of the most remarkable trade centers of the old world.A millennium later, the coastal province has pushed its business boundaries even further, only this time, with its innovative free trade zone, the world can enjoy greater benefits from China’s surging economy and huge domestic market.Established in 2014, the Guangdong Free Trade Zone (FTZ) has been taking the lead in China’s opening-up to the world, serving as China’s test ground for deepening cooperation in the Guangdong- Hong Kong-Greater Bay Area, as well as an incubator for new systems and policies. As of September this year, a total of 250,000 new enterprises have settled in the FTZ, including 14,000 foreign-invested businesses. Over 270 Fortune 500 companies have established their business here, attracting over $ 17.4 billion in foreign investment.“China’s reform and opening-up has entered a deep-water zone, where tough challenges must be faced. The FTZ provides us a platform to explore new ways to solve problems that hinder the country’s development, invigorating the second boom of China’s opening up,” said Dong Feng, General Manager of Qianhai Mercantile Exchange (QME), an HKEX company in Guangdong FTZ.New land for China’s opening upLocated on the southern edge of Shenzhen, Qianhai Area, a former sleepy fishing village, is now one of three areas of the Guangdong FTZ. This thriving economic hub has attracted leading firms and start-ups from Hong Kong and Macao, thanks to its institutional innovation and other incentives including start-up incubators.As for its financial sector, Qianhai has rolled out over 70 innovative measures to support economic innovation, including the approval of the first batch of mainland asset managers to take part in the Qualified Domestic Investment Enterprises scheme. This scheme allows Chinese mainland investors to tap into a wider variety of foreign asset classes, while institutional innovations are introduced every three days, on average, to explore new possibilities in the open economy further.Such favorable conditions have attracted many financial giants, such as QME, to establish their business in Qianhai. Launched in October, QME, China’s testing bed for commodity trade, aims to build an efficient platform for China’s spot exchange, helping the country gain pricing power over bulk commodities.“Our mission is to reshape the landscape of China’s bulk commodity market, which is an unprecedented endeavor, for that we need institutional innovations and new policies, which Qianhai can offer,” said Dong.According to Dong, in order to promote China’s economic development, reform is required to shake up some deep-rooted structural problems, while Qianhai can provide a testing ground to help open China wider to the outside world.Echoing Dong, Eric-Kuo, co-founder of R-Guardian, a Hong Kong company in Qianhai featuring smart security technologies such as credit card shielding solutions, noted that Qianhai’s innovative measures to attract startups have transformed the area into a dream for young entrepreneurs like him.“Favorable policies such as assistance to connect with investors are especially attractive to start-ups from Hong Kong and Macao, as many of us have been struggling to find investors due to the high operational cost at home,” said the 27-year-old Hong Kong entrepreneur.To attract talents like Kuo, a university-like incubator was founded in Qianhai in 2014, providing young entrepreneurs one-year free rent, a favorable tax rate and assistance to connect with well-known angel investors and venture funds to those aged between 18-45. The center has so far helped 340 start-ups, 169 of which are from Hong Kong and Macao, while half of their projects have already obtained investment, worth a total of over 1.5 billion RMB (about $ 210 million).Institutional innovation has attracted foreign investment and talents to Qianhai. Moreover, successful projects have now also been introduced across the country. According to local authorities, Qianhai has so far produced 401 institutional innovation projects, with 28 spreading nationwide and 62 being rolled out in Guangdong Province.“As the frontline of China’s reform, Guangdong FTZ generated great rewards in the past. I believe the FTZ will serve as a pioneer for China’s further opening-up, benefiting both China and the world with its institutional innovation,” said Dong.The power of advanced technologiesIn addition to institutional innovation, new technologies have also become a major focus of Guangdong FTZ. Seventy-three kilometers away from Qianhai Area, Nansha New Area in Guangzhou serves as Guangdong FTZ’s tech hub. The palm-sheltered region boasts countless tech startups, many of which have become leading powers in their field thanks to the support of local authorities. Pony.ai, a self-driving car unicorn company based in Nansha New Area, has become a name card of Guangdong FTZ. The company has conducted countless road tests in Nansha New Area, constructing a reliable database that can help driverless cars adapt to China’s complicated road conditions and traffic.“Real road tests are crucial for driverless cars to retrieve valid data, which can help them cope with unexpected situations in the future. We would often report in advance to the government, asking for a specific area in the city to test our product, and the local authorities are cooperative and helpful,” said Cao Tiantian, the company’s business development manager, noting that the FTZ is a visionary when it comes to the development of new technologies.According to Cao, favorable policies including preferential tax rates and easier registration procedures for foreign talents have boosted the company’s development, allowing it to become a leading power in AI and driverless car technologies.“We are going to carry out a trial for a driverless car-hailing service by the end of 2018. This innovation could not have been realized without the help of the FTZ,” she added.VIPSHOP, an e-commerce company born and raised locally, also enjoys excellent benefits thanks to the local authorities’ support in high tech. According to Peng Xinguo, senior manager of VIPSHOP’s warehouse located in Nansha harbor, a new headquarter along with a warehouse equipped with full-automatic product lines is expected to be finished in Nansha New Area in 2019, with an investment of over one billion Yuan.“Faster logistics is the core competitiveness of any e-commerce company. Nansha’s advanced intelligent clearance system ensures greater time-efficiency and allows the customers to track every piece of information about their products online,” he said.According to Peng, with the company’s new automatic product line and the FTZ’s intelligent clearance system, the whole process from a product being imported to being in the hands of a customer only takes about three to six days.“Since the trial of cross-border e-commerce business started, VIPSHOP’s cross-border business has generated an annual revenue of over 8.24 billion yuan. With the help of modern technologies and the support of the FTZ, I believe this revenue will grow even more in the future,” added Peng. Source: en.people.cn

Belt, Road exporting China's know-how

The China-proposed Belt and Road Initiative is bringing the Asian country's infrastructure capital and knowhow to developing countries involved in its expansion, a renowned US scholar said."China has shown itself to be a vivid example of the benefits that can flow from the active hand of government in investment in infrastructural development," Sourabh Gupta, a senior fellow at the Washington-based Institute for China-America Studies, said in a recent interview."As the Belt and Road Initiative is extended and expanded overseas, it will afford a similar foundation on which developing countries can jump-start their own development on lines achieved by China over the past three decades," he said.Proposed by China in 2013, the BRI, which refers to the Silk Road Economic Belt and the 21st Century Maritime Silk Road, aims to build a trade and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes of the Silk Road.Development under the initiative's transnational framework involves a variety of countries, and China has the finance, skills and experience to make infrastructure growth a reality, Gupta said.The key is early-stage investment in hard and soft infrastructure, he noted.While trade liberalization and market forces are important for resource allocation and growth, inclusive industrialization-led development "cannot be left to market forces alone," he said."The active hand of government is required to overcome a host of deficiencies related to institutional shortcomings, rent-seeking, and a general lack of competition," he said.It is also important to ensure that the infrastructural investments under the BRI banner are "well-designed and productivity-enhancing", given that these investments have long gestation periods, and the financing that is provided needs to be paid off from the productive assets created, said the expert."Creating long-term productive assets requires wise and patient capital - a difficult challenge, and this is the reason that there is such a vast global deficiency in infrastructure investment. So Chinese capital and know-how are very important to fill this gap," he said.The world's infrastructure spending is insufficient. For example, $5.5 trillion is needed between now and 2035 to fill the gap in global infrastructure spending, according to the McKinsey Global Institute."But for the gap to be filled efficiently, it also requires that the feasibility of projects is conducted with great due diligence and does not add to the creation of unproductive assets that could saddle countries with excess debt," Gupta said."In this regard, it is important to stock-take the achievements and progress under the BRI, so that the initiative can be rolled out even more effectively."Source: China Daily

Biomedicine emerging as zone's pillar industry

After five years of development at the China-Singapore Suzhou Industrial Park, Innomed Medical Device plans to bring one of its guide wire products - widely used in cardiovascular operations - to major Chinese hospitals in the first quarter of next year.Innomed expects to mass produce the guide wire from next year, and will expand its current 1,600-square-meter plant area to 3,000 sq m in 2019, said Gong Xiaoyan, founder and CEO of Innomed.Gong set up the company at Suzhou Industrial Park in 2013, hoping to localize the production of certain interventional and implantable medical devices. The ultimate goal is to break the monopoly of imported cardiovascular guide wires in the Chinese market, he said.In April, one of Innomed's guide wire products obtained approval from the US Food and Drug Administration. Two months later, the product was also approved in China, marking the startup's substantial progress.Before deciding on the Suzhou Industrial Park, Gong visited numerous similar parks in other Chinese cities including Shanghai and Shenzhen. But the detailed advice and policies offered by the administrators in Suzhou helped him to make his final decision."Our company's chief technology officer has relocated here from the United States. At present, he is the highest-paid employee at Innomed, as he has been offered a number of subsidies based on local policies," he said.Apart from economic incentives, Suzhou Industrial Park has connected the company with a number of local universities, including Soochow University, Xi'an Jiaotong University Suzhou Academy and Xi'an Jiaotong-Liverpool University, Gong added.According to him, labor costs have been rising lately, but the company has still managed to build a research team of 10 people, representing 20 percent of the company's total headcount.As the biomedicine industry is still an emerging industry, Innomed has to search worldwide for the right personnel. To meet such needs, the biomedicine industrial zone where the company is located provides an industry cluster, helping companies to set up exchanges with other companies in the park."To me, the Suzhou Industrial Park bears some resemblance to Silicon Valley, where academic background talks louder than anything else," he said.The rapid growth of Innomed is just a snapshot of the mushrooming biomedicine industry in the park. At present, Suzhou Industrial Park has gathered more than 1,200 biomedicine companies and 20,000 high-end technology professionals.The output of the park's biomedicine industry is expected to reach 78 billion yuan ($11.3 billion) this year.With the help of the park's administrative committee, more than 20 biomedicine funds had invested there by October, providing financing worth more than 30 billion yuan.Suzhou Industrial Park's effort to nurture biomedicine companies is also a response to the central authorities' call for the fostering of new technologies, new organizational models and new industrial clusters. This was a major message conveyed at the annual Central Economic Work Conference, which concluded in Beijing on Dec 21.According to Wu Qingwen, secretary of the park's Party working committee, biomedicine is one of Suzhou Industrial Park's three pillar industries. The sector's annual growth rate will remain at 30 percent in 2019."The aim is to build an industrial cluster worth more than 100 billion yuan in the near future. We should attach more importance to the innovation of new technologies, as well as the products, materials and products developed on our own," said Wu.Source: China Daily

High-tech seen as key to industrial upgrade

Push for more robust domestic market part of plan to maintain stable growthChina aims to maintain stable industrial growth in 2019 by cultivating a more robust domestic market and further leveling the playing field for foreign and private enterprises, the nation’s top industry regulator said on Friday.The plan came as the nation’s industrial output, an economic indicator measuring industrial activity, is forecast to expand by 6.3 percent in 2018, meeting the target of around 6 percent growth for this year.The Ministry of Industry and Information Technology said it will step up the push to boost information product consumption and nurture high-tech industries such as wearables, drones and service robots in 2019.“We will guide local governments to build a number of model cities in spurring consumption and roll out policies to promote the development of high-definition video and internet of vehicles,” said Miao Wei, minister of industry and information technology, at the ministry’s annual work conference, which concluded on Friday.According to Miao, the ministry will also implement policies to expand market access for the shipbuilding, automobile and aircraft sectors, and further multilateral cooperation in equipment manufacturing and information infrastructure construction.His comments came after China managed to keep industrial growth on track this year, despite trade conflicts among major economies that have had a negative impact on China’s domestic economy.In 2018, China’s manufacturing investment growth rebounded significantly, with dozens of intelligent manufacturing pilot projects established and the software and information technology service sector forecast to record 15 percent year-on-year growth.Wang Peng, deputy director of the China Center for Information Industry Development, said that although retail sales growth in consumer electronics slowed in 2018, the Ministry of Industry and Information Technology’s efforts to bring a more robust domestic market will help buoy consumption in information products.“Also, the maturity of fifth-generation mobile communication technology next year will also spur consumers to buy more cutting-edge devices,” Wang said.The ministry said on Friday that research and development of commercial 5G products will be accelerated in 2019, in order to lay down a better telecommunications infrastructure for industrial upgrading.It also aims to make a fresh push to marshal the country’s high-end manufacturing power by strengthening the in-depth integration of cutting-edge technologies into traditional sectors.Qu Xianming, with the National Manufacturing Strategy Advisory Committee, said the goal to move up the industrial value chain is gaining steam across the country, which can play an effective role in buoying the country’s industrial economy.From January to November, the output of China’s high-tech manufacturing industry expanded by 11.8 percent year-on-year, outdoing overall industrial output growth, according to data from the National Bureau of Statistics.Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation, said China is welcoming foreign and private enterprises to enter more key sectors, which will inject new vitality into the country’s industries.Source: China Daily