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Excerpts from State Council policy briefing on Aug 25

Updated: Aug 25,2017 9:04 PM

The State Council policy briefing on Aug 25 focused on a guideline made public recently for ensuring the steady growth of foreign investment.

The State Council Information Office invited three officials — Wang Shouwen, vice minister of commerce; Zhang Jianguo, head of the State Administration of Foreign Experts Affairs; and Wang Jianfan, a senior official from the Ministry of Finance — to the policy briefing to elaborate on this issue.

According to Wang Shouwen, the new guideline includes 22 measures in five areas.

First, China will continue to reduce market access restrictions for foreign capital, with a list of projects not suitable for foreign investment that has been tested in pilot free-trade zones to be rolled out nationwide as soon as possible. The restricted items on the list have been reduced from 190 to 95.

China will expand market access to allow foreign capital to enter sectors including new-energy vehicle manufacturing, ship design, aircraft maintenance and railway passenger transportation.

“Take the new energy vehicles and special-purpose motor vehicles as examples,” Wang Shouwen said. “At present, shares held by foreign capital of these two specific categories should not surpass 50 percent, but the ratio will be raised according to the document.”

Second, the government will make fiscal and taxation support policies.

Wang Jianfan explained that in the early stage of the reform and opening-up, China adopted a complicated tax system.

Since tax reform in 1994 and the new corporate income tax law in 2008, the collection policies and applicable laws for domestic and foreign enterprises have been unified.

With a unified tax law in place, all the preferential tax policies are equally applicable to all enterprises. More targeted policies were also released to support startups and small enterprises.

For foreign enterprises that reinvest their profits in China, the 10 percent withholding income tax will be exempted.

The 15 percent preferential tax rate for advanced service enterprises will be rolled out nationwide. The policy designed to encourage the service outsourcing industry is currently operating in 31 pilot cities.

Meanwhile, supporting policies are under consideration to encourage Chinese enterprises that invest overseas to spend more in their own country.

Wang Jianfan said the current policies continue to encourage foreign enterprises to invest in China and also support Chinese companies to go overseas.

Third, the investment environment in national-level development zones will be improved by giving the zones more authority in investment management and raising their ability to provide industrial services, Wang Shouwen continued.

In recent years, national-level development zones encountered a series of challenges in attracting foreign investment which resulted in a 9 percent drop year-on-year.

To tackle these problems, the guideline demanded departments and local authorities finance the zones, especially old industrial bases by making use of State funds, issuing bonds and tapping more channels.

Fourth, more conveniences will be provided for foreign talents to facilitate their exit and entry of the country.

The new work permit system will make it more convenient for foreigners to get a visa to work and live in China, Zhang Jianguo said.

Having taken effect on April 1, the new permit requires less documents and time for applicants. All the paperwork will be available in a single online service system, he said.

According to the new permit system, high-end talents and professionals will be encouraged to work in China. An effective and market-oriented assessment mechanism will be created.

As another measure to attract foreign senior talents, Zhang said the government is elaborating on “talent visa”, a new type of visa for foreigners entering China.

The talent visa will be issued to a large group of foreigners, he said, including tech leaders, entrepreneurs, professionals and skilled technicians — the kind of people in high demand in China’s economy. It is estimated that over 50,000 people will take up the visa.

The talent visa will last from five to 10 years with multiple entry, compared with the one or two years work visa most foreigners working in China have.

In addition, an online “green channel” will be set up for high-end foreign talents to help them apply for the visa.

Fifth, improve the environment for growth and raise the quality of foreign investment, especially in the protection of intellectual property rights.

China has attached great importance to intellectual property protection and achieved great results. In 2001 when China joined the WTO, it spent $1.94 billion in buying intellectual property from other counties. The cost increased to $24 billion last year, an annual growth of 18 percent. The figures indicate China has largely reinforced its efforts in the field.

According to Vice-Premier Wang Yang, who is leading the working group on combating IP infringement, the administration has amended 10 laws and regulations on trademarks and launched 170 specialized campaigns since its establishment in 2013. About 1.3 million cases of IP breaches have been handled and nearly 100,000 people held accountable.

The Ministry of Commerce will roll out a series of policies to make sure the guideline is fully implemented, along with other departments, before the end of September, Wang Shouwen added.

The document is based on a similar circular released at the beginning of this year with more detailed measures and a timetable. It is aimed at pushing China’s opening-up to a higher level, he said.

As regards to data showing foreign direct investment inflow dropped 1.2 percent year-on-year in the first seven months of this year, Wang Shouwen explained that an improved structure is more important, as high-tech manufacturing saw FDI rise 8.3 percent and foreign investment in high-tech services surged 16.8 percent.