China vows further support for foreign investment

China's State Council on April 13 released new guidelines for foreign investment in China, encouraging foreign funds to flow to high-end manufacturing, hi-tech and eco-friendly sectors and to mid and western China, but restricting funds to environmentally unsound projects.

China also promises more favorable policies for foreign-funded companies, including tax incentive measures.

Better structure

According to the new regulations, China still welcomes foreign investment in high-tech industries, services sectors, energy-saving and environmental protection, but polluting and energy-intensive projects or those in industries running at overcapacity are not wanted. Foreign capital is also welcome in outsourcing services sectors.

Qualified foreign-funded companies will also win the policy support in China's stimulus package for 10 key industries.

In addition, foreign-funded projects that are in the "encouraged" category will be able to enjoy lower land prices.

Transnational companies are encouraged to establish regional headquarters, R&D centers, purchase centers, financial management centers and other functional departments in China. Imports for scientific and technological development by qualified foreign-funded R&D centers will be exempt from tariffs, importing value-added tax and goods and services tax by the end of 2010, according to the regulations.

"Go West"

Foreign-funded enterprises are encouraged to increase their investment in China's central and western regions, particularly in eco-friendly and labor-intensive companies.

Tax incentive policy for qualified foreign-funded companies will continue in order to maintain the trend of growing foreign investment in the western regions of China. Foreign companies that go from China's coastal regions to the western area will also receive policy support and more convenient procedures.

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Various ways of foreign capital utilization

According to the regulations, the State Council said China will continue to support Chinese A-share listed companies in further introducing strategic investment from home and abroad and standardize foreign companies' investment in domestic securities and corporate merger and acquisition moves.

A national security examination mechanism will be built as soon as possible for foreign-funded companies' merger and acquisition operation in China, according to the regulations.

Qualified foreign-funded companies are allowed to go public, issue corporate bonds or medium-term bills in China.

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Reform of management mechanism

To create a favorable environment to attract foreign investment, China will organize and standardize the administrative fee and inspection regulations involving foreign investment and further transfer the jurisdiction for examining and approving foreign investment to lower government levels. It will make great efforts to promote online examination and approval procedures and improve foreign-invested enterprises' joint annual inspection system.

By People's Daily Online