State Council proposed 24 measures in a greater effort to attract foreign investment

Facing adverse effects such as the sluggish recovery of the world economyand shrinking external demand, China sees severe challenges in attractingforeign investment. In order to better cope with these challenges, the StateCouncil issued the “Opinions on Further Optimizing Business Environmentand Stepping Up Effortsto Attract More Foreign Investment” (herein after referred to as “Opinions”) on 14 Aug., 2023, proposing 24 policy measures fromsix aspects.

Table: Opinions’ 24policy measures mainly from six aspects

Source: State Council

In the “Opinions”, drawing more foreign investment in key sectors includes supporting foreignenterprises to set up R&D centers in China, jointly carrying out technology researchand development and industrial application with domestic enterprises, andencouraging foreign-invested enterprises and their R&D centers to undertakemajor scientific research projects. Under the premise of complying with relevantlaws and regulations, the nation will accelerate the implementation andcommissioning of foreign-invested projects in the field of biomedicine,encourage foreign-invested enterprises to carry out clinical trials of overseasmarketed cell and gene therapy drugs in accordance with the law, and optimize thereporting procedure for the listing registration application of domestic-produceddrugs transferred from marketed overseas-produced drugs. Furthermore, foreign-investedenterprises will be supported to carry out vocational education and training withvarious vocational colleges (including technical colleges) and vocationaltraining institutions in fields such as advanced manufacturing, modernservices, and the digital economy.

In addition to improving the quality of foreign capital utilization, policiessuch as guaranteeing national treatment for foreign-invested enterprises,continuously strengthening the protection of foreign investment, improving thelevel of investment and operation facilitation, and increasing fiscal andtaxation support are also mentioned in the “Opinions”, closely related to theactual demands of foreign enterprises.

Among them, in terms of guaranteeing national treatment forforeign-invested enterprises, the “Opinions” proposes to guaranteeparticipation in government procurement activities in accordance with the law,support equal participation in standard formulation work in accordance with thelaw, and ensure equal enjoyment of supporting policies. In terms of continuing tostrengthen the protection of foreign investment, the “Opinions” make it clearthat the mechanism for the protection of foreign investment rights andinterests should be improved, the administrative protection and enforcement ofintellectual property rights should be strengthened, and the formulation offoreign-related economic and trade policies and regulations should beregulated.

In terms of improving the level of investment and operation facilitation,the “Opinions” proposes to optimize the residence policy of foreign employeesof foreign-invested enterprises, explore a convenient security managementmechanism for cross-border data flows, coordinate and optimize the lawenforcement inspection of foreign-invested enterprises, and improve theservices guarantee of foreign-invested enterprises. In terms of increasing fiscaland tax support, it is necessary to strengthen the guarantee for foreigninvestment promotion funds, encourage foreign-invested enterprises to reinvestin the country, implement relevant preferential tax policies forforeign-invested enterprises, and support foreign-invested enterprises toinvest in areas encouraged by the state.

In addition to the 24 measures recently issued by the State Council, sincethe third quarter, various localities and departments have actively deployedresources to strengthen communication with foreign-funded enterprises andforeign chambers of commerce, in a bid to help foreign-funded enterprisesdevelop in China in a long-term and stable manner. The main measures include establishingthe round table conference system for foreign-funded enterprises, conducting researchon reducing the negative list of foreign investment in the Hainan Free TradePort, promoting the implementation of foreign investment projects, and focusingon the manufacturing industry to promote the expansion of foreign investment,stabilize the stock, and improve the quality, etc.