China eases restrictions on foreign investments

(ECNS) – China is poised to boost foreign investments in the country.

The Ministry of Commerce issued a notice Tuesday to lift the restrictions on the first batch of foreign investments, the payment ratio of currency, and the period of investment of foreign-funded enterprises, including those of Taiwan, Hong Kong and Macao.

The policy clarifies a new company law that went into effect in March by including foreign companies. The law encourages the setup of new companies by cutting red tape and lowering thresholds such as the minimum registered capital.

Along with an economic slowdown, China is seeing a downward trend in its foreign investments. In May, the country's actual foreign investment stood at $8.6 billion, a year-on-year drop of 6.7 percent, the biggest slide in the past 16 months.

Santosh Pai, partner at the Indian law firm D.H. Law Associates, said the policy's major beneficiaries will be trade companies, startups and other small and medium-sized foreign enterprises. For those with abundant capital or long histories of operation in China, Pai said money isn't their biggest problem.

Pai said the biggest challenge for foreign capital is the overall market and the reception of foreign products in China.