China announced on Friday that it has lowered the bar for foreign companies to invest in Beijing's service businesses, including banking, entertainment and air transportation, to ease market access restrictions on foreign direct investment from Dec 10 to May 5.
The State Council decided to allow Beijing during this period to adjust its requirements so foreign companies can invest in performance and entertainment businesses with no investment ratio being set.
Supported by new policies, foreign banks and their joint ventures can apply for renminbi business when they submit the opening application to related authorities in the Chinese capital until May. They used to gain such qualification only after operating a business in China for one year.
Foreign companies are also entitled to invest in the air transportation sales business. They previously could invest only in projects related to air transportation infrastructure.
"Led by supply-side structural reform and the booming size of the middle class, China's ability to gain FDI is increasingly dominated by the service sector, and more profound changes are occurring in relatively developed regions," said Feng Yaoxiang, a spokesman for the China Council for the Promotion of International Trade.
Feng said companies from developed countries have noticed the trend and have become more willing to invest in service businesses.
China implemented a revised foreign investment catalog earlier this year, which relaxed restrictions on foreign investment in a number of industries.
"The country will push for nationwide implementation of a pre-establishment national treatment system as well as a negative list, which determines industries in which foreign participation is prohibited or limited," said Ministry of Commerce spokesman Gao Feng.
A negative list approach to market entry, which specifies the sectors and businesses that are off-limits to foreign investment, will be expanded nationwide in 2018.
"Developing service business is vital to sustaining economic growth and encouraging foreign capital to flow into the country," said Li Guanghui, vice-president of the Chinese Academy of International Trade and Economic Cooperation in Beijing.
