2012-01-16 10:11:43
At the end of December 2011，The National Development and Reform Commission of P.R.China（NDRC) and the Ministry of Commerce of P.R.China (MOC) jointly issued a new Catalog for Guidance for Foreign Investment,which is intended to encourage more foreign investment into energy-saving & environment-friendly technologies, new-generation information technology, biotechnology, high-end equipment manufacturing, alternative energy, advanced materials, and alternative-fuel cars.
The new Catalog will take effect on January 30, 2012, which is the fifth revision, replacing the 2007 Catalog (The first one was released in 1995). Foreign invested enterprises approved prior to the effective date will not be effected. However, any changes to existing foreign invested projects that take effect after the effective date must comply with the terms of the new Catalog.
In accordance with the new Catalog, China will cut down restrictions on foreign investment by allowing them to invest in more sectors while lifting caps on the proportion of foreign capital in some sectors.Meanwhile, China will continue to welcome foreign investors to high-end manufacturing and modern service industries. Ihe Guidance also encourages them to invest in recycling industries.
However, the government will withdraw support for foreign capital in auto manufacturing because of the need of the healthy development of domestic auto making.It will neither support foreign investment in the sectors of polycrystalline silicon and coal chemical due to concerns of industrial overcapacity and repeated construction, as per the Catalog.
In light of regional development gaps, China will roll out a fine-tuned policy for the central and western regions in the future.
As explained by the NDRC, the new Catalog reflects the following changes:
1. Continued openness. This continues the trend towards opening up of the economy, consistent with China's WTO commitments and the need to make use of advanced foreign technology. In the new Catalog,three items were added to the encouraged category, while seven items were removed from the restricted category and one item was removed from the prohibited category. In addition, where joint ventures are required, the required Chinese share was reduced in eleven cases and was not increased in any case.
2. Modernization and technical advance in the manufacturing sector. Consistent with the 12th Five Year Plan, the Catalog focuses heavily on promotion of the traditional manufacturing sector. In particular, advanced technology in textiles, chemicals and equipment have been added to the encouraged category. The deletions from the encouraged category reflect the government's desire to prevent excessive investment in conventional manufacturing technology, particularly where there is extensive current investment by foreign enterprises. This goal is reflected by the deletion of vehicle manufacturing from the encouraged category. The government also intends to prevent excessive investment in certain "trendy" sectors. This goal is reflected by deletion of mono crystalline silicon and chemical processing of coal from the encouraged category.
3. Promotion of strategic new industries. A central goal of the 12th Five Year Plan is to move China beyond reliance on traditional manufacturing and onto strategic new industries that will mark the manufacturing world of the next several decades. The following seven such strategic industries have been identified:
Alternative fuel cars:hybrid cars and electric cars as well as better fuel-cell batteries;
Biotechnology: biomedicines, new vaccines, and advanced medical equipment;
Environmental and energy-saving technologies: energy efficiency, pollution control, clean coal, waste-matter recycling and seawater usage;
Alternative energy: ext-generation nuclear power plants, solar power, wind power, smart grids and bioenergy;
Advanced materials: rare earths, special-usage glass, high-performance steel, high-performance fibres and composites, engineering plastic, nano and superconducting materials;
New-generation information technology: cloud computing technology, high-end software, virtual technology and new display systems; and
High-end equipment manufacturing: Aircraft, high-speed rail, satellites and offshore oil/gas equipment.
4. Modern service industry. Service businesses that have a direct, practical value to the Chinese people or to China industry will be encouraged. Among the new entries in the encouraged category are:
Electric car fueling stations
Enterprise start-up consulting
Intellectual property consulting
Marine oil spill cleanup technology
Vocational skill training
In addition, medical enterprises and financial leasing have been removed from the restricted category.
5. Adaptation to differences in regional development. The basic approach of the Catalog is actually concentrated on the development of the already advanced coastal region. The goal of pushing China to high technology modernization conflicts with the extremely low state of development in the Western, Central and Northeast Regions, where the vast majority of the Chinese people actually live. For development in these regions, the government will need to take a different approach to foreign investment. For example, low value added, high labor content manufacturing that is strongly discouraged for the East may be permitted or even encouraged in the less advanced Western and Central regions.
In the first 11 months of 2011, China attracted USD103.77 billion of foreign direct investment, up 13.15 percent from a year earlier.During the same period, the country approved the establishment of 25,086 foreign-invested companies, up 3.23 percent year on year.
The English version of the Catalog is available here:
view.php?id=2551
You may download the Chinese version below.
Catalog for Guidance for Foreign Investment (In Chinese)