New catalogue seeks investments in high-end services, manufacturing
Experts said China will benefit from the timely revision of its foreign investment guidance catalogue, as the period for soliciting public opinions comes to a close on Friday.
The Ministry of Commerce (MOFCOM) and the National Development and Reform Commission (NDRC) issued a draft seeking public input for the 7th revision to the foreign investment industry catalogue on December 7. The last revision to the catalogue was made in 2015.
The industries restricted to foreign investors will be reduced from 93 to 62, according to a statement posted on the NDRC website.
Major areas that will be opened up to foreign companies in the services sector include road transportation, credit surveys and ratings. In the manufacturing sector the expansion will include rolling stocks, automotive electronics, motorcycles and corn processing.
China's continued efforts to open up to foreign investment are linked with the country's economic transformation, hurdles faced by the nation's manufacturing sector and the "Made in China 2025" strategy, according to a report by news portal cnr.cn on Friday.
Zhang Jianping, an expert with the MOFCOM, was quoted as saying that foreign capital played an important role in China's economic transformation with more foreign companies venturing into the service sector and high-end manufacturing.
Benefits to domestic firms
Zhang Ning, a research fellow at the Chinese Academy of Social Sciences, said the opening up in high-end manufacturing and services will directly benefit those industries.
"What we will see is, at first, domestic firms might be overshadowed, but then in a few years they will improve to compete with their foreign counterparts due to a spillover effect in which expertise is passed on from foreign companies to domestic companies via a talent flow," Zhang said, noting that attracting more foreign firms doesn't contradict the national "Made in China 2025" strategy, which calls for core technologies to be mastered by domestic industrial champions.
On Tuesday, the Delegations of German Industry and Commerce in China said it generally welcomed the new structure of the draft, which distinguishes between encouraged sectors and the new "negative list."
"However, we get the impression that there is no substantial opening up for foreign investors in the draft as expected. Most sectors are just rearranged under adjusted terms," the organization said in a statement on its website.
Country tops FDI destinations
Actual utilized foreign direct investment (FDI) from the US and the EU recorded year-on-year growth rates of 55.4 percent and 43.9 percent in the first 11 months of 2016, respectively, MOFCOM spokesman Shen Danyang told a press briefing on December 29.
The services industry saw an actual utilized FDI year-on-year growth of 3.8 percent, Shen said.
More technology-driven companies including German automaker BMW, global oil giant BP and Swedish furniture giant IKEA increased their investment in China in 2016, he said.
China has attracted roughly $110 billion of FDI each year since 2010, and China has ranked No.1 in terms of actual utilizing FDI among developing countries for 24 consecutive years, Shen noted.
Despite some issues, such as rising labor costs and a depreciating yuan, China is still perhaps the best investment destination among the world's developing nations due to its vast market, solid infrastructure and a comprehensive industrial value chain, Zhang noted.
"India is comparable to China in terms of market size, but its infrastructure and industrial chain is no match to China. Similarly, while Southeast Asia and Latin America offer lower labor costs, they also lack infrastructure and an industrial chain," Zhang told the Global Times on Tuesday.
Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, said foreign investment into China is also transforming and moving toward high-end, higher-quality sectors.
"A higher-quality foreign investment is what China looks for, given that its volume of FDI is basically stable. And services and high-end manufacturing are major traits of high-quality foreign investment," Bai told the Global Times Tuesday.
The revision of the foreign investment catalogue is in line with China's industrial guidance policy, Bai said.
