INVESTING IN CHINA

Release and revision of the Catalogue of Priority Industries for Foreign Investment in Central & Western Regions “

The Catalogue of Industries for Guiding Foreign Investmenis a publication which enables foreign investors to be informed about what sectors are limited or put forward by the Chinese Government. Indeed, two authorities usually issue the Catalogue: the National Development and Reform Commission (NRDC) and the Ministry of Commerce (MOFCOM). It has been updated in 2012 in order to encourage foreign investments and offer a better knowledge of the Chinese market.

The objectives of the Catalogue are mainly to:

  • Promote a continuous and regular opening of the Chinese economy and Chinese market to foreign investors;
  • Move towards more new industries and opt for more modern solutions by developing high technology, domestic industries, resource-sectors;
  • Hinder the evolution of traditional and labour-intensive manufacturing sector and work towards the modernization of the manufacturing sector; and
  • Promote of new strategies industries and domestic industries based on use of biotechnology, alternative energies, and environmental friendly solutions.

Catalogue’s influence on foreign companies investments’ choices

The release of such a catalogue translates in fact the new project of the National People’s Congress, the State Council’s Opinion, as well as China’s WTO commitments, which is to lead Chinese action plan projects towards more liberalized foreign investment in specific sectors. Thus, it is a way for the government to supervise and regulate the industries that foreign investors could effectively become established in 

The organization of the Catalogue is extremely detailed. There are 12 categorised sectors which are listed in three different categories- encouraged, restricted and prohibited. The table below might give you an idea on how this new Catalogue (2011) flows from the previous one (2007).

Major changes in the “encouraged”, “restricted” and “prohibited” categories in the new catalogue

Thus, investing in industries that belongs to the “Encouraged” category permits the foreign investors to benefit from tax reductions or incentive measures regarding the circumstances.

As a result, foreign-investors need to be well informed and adapt their strategies to the various practical advantages and obstacles while making investment decisions in the PRC.

As a consequence, the new Catalogue is focusing on 267 priority industries in 20 provinces as Shanxi, Henan, Chongqing, Sichuan, Yunnan, Guangxi, etc. The PRC is obviously launching a policy, which encourages the opening of central and western regions because of the low state of development in those parts of the country. There is no longer a focus on job creation, but on only a call for constant modernization in China.

 

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