Foreign investment rules eased

China will remove the requirement on foreign investors' initial investment and minimum registered capital, according to a statement released by the Ministry of Commerce (MOC) on Tuesday.

The amount of investment, investment period and nature of forms used for the investment is up to foreign investors to decide, and should be stated in a contract, the MOC said.

The minimum registered capital requirement is no longer capped for foreign investment, unless required by other laws and regulations, the ministry noted.

"It shows that China is more open to foreign investment," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation under MOC, told the Global Times Tuesday.

The new rules are aimed at boosting foreign investment, Bai said.

Under previous rules, foreign investors were generally required to contribute at least 25 percent of the registered capital of a joint venture company in China.

The new rule is also regarded as an expansion of China's latest effort to reform its Company Law to spur the vitality of businesses.

The country amended its Company Law in March this year, scrapping the minimum registered capital requirement for setting up companies.

Reuters reported Tuesday that the limit lift on foreign investment is part of an ambitious financial reform that China is going through and the government is cutting off red tape for the world's second-largest economy to be closer with free markets.

However, certain restrictions on foreign investment still exist under specific regulations. Some important industries and sectors, such as banking, shipping and automaking, still have limitations and caps on foreign investment below 50 percent in a joint venture.

The negative list approach adopted in China (Shanghai) Pilot Free Trade Zone began to remove limits on foreign investment and is expected to expand nationwide, Bai said.

The negative list approach means that if a sector is not included on the list, foreign companies can invest in it without restriction.

Foreign investors have been longing for more space in the Chinese market, and the negative list is still considered too long.

Companies hope to see opening of additional services sector to foreign investment, Greg Gilligan, chairman of the American Chamber of Commerce in China, said at a press conference in April.

The negative list is expected to be shortened by one-third this year, according to local officials.