According of Minister of Commerce Chen Deming, in order to further expand the scope for Sino-foreign cooperation, introduce new investment formats and optimise foreign investment structure, China is going to take steps to remove barriers such as easing restrictions on the equity ratio of foreign investors to allow qualified foreign-invested enterprises (FIEs) to seek listing on the mainland.

Hit by the international financial crisis, the inflow of foreign direct investment into China has been sliding for 10 consecutive months. From January to July this year, there were 12,264 newly established FIEs in the mainland with utilised foreign capital amounting to US$48.4 billion, down 27.4% and 20.4% respectively year on year. In the first half of 2009, China’s cumulative non-financial outward direct investment reached US$12.4 billion, a drop of 51.7% year on year.

Chen pointed out that at present the global economy is showing signs of improvement, but overall the economy is still in recession and the fundamentals for recovery are unstable. In order to further promote two-way investment, China’s next move will include devoting continued efforts to the following:

1. To advance China’s opening-up in breadth and in depth. Efforts will be made to proactively and steadily promote liberalisation of the service industry, gradually easing restrictions on the equity ratio of foreign investors; encourage remote areas to expedite their development by opening up; strengthen the construction of various kinds of special economic zones such as state-level economic and technological development zones and border economic cooperation zones.

2. To expand the scope of cooperation, introduce new investment forms, and optimise foreign investment structure. Action will be taken to encourage foreign investors to invest in high-tech industries, promote the development of modern services (especially service outsourcing), and attract foreign investment in clean energy and energy-saving industries. Efforts will be made to promote the shift of export-oriented industries to the central and western regions, and allow qualified FIEs to go public in the mainland.

3. To further fine-tune the legal and policy environments to facilitate two-way investment. Using “facilitation” as the core, steps will be taken to enhance and improve services for FIEs, gradually extending national treatment to FIEs. Continuous efforts will be made to improve policies supporting enterprises to “go out”, establish protection systems, and improve ways of handling offshore disputes and sudden incidents.

4. To further strengthen the regulation and management of enterprises “going out”.  Guidance will be provided to enterprises to abide by the laws and regulations of China and their resident country or region, respect local customs and practices, operate business in compliance with law, abide by agreements, and keep in harmony with the local people on a mutual-benefit and win-win basis.