Listed companies introducing strategic investment of foreign investors is included into recording management
The National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOC) recently released a revised catalogue for guidance on foreign investment in China, which enhanced opening up in such sectors as service, manufacturing and mining. The catalogue includes the establishment and change of status of foreign enterprises due to merger and acquisition (M&A) activities which are not involved in special administration measures on access, including listed companies introducing strategic investment of foreign investors, into recording management.
MOC’s spokesman Sun Jiwen said at the press conference on June 29 that the MOC will come up with supporting measures, revise and roll out recording management methods for establishment and change of status of foreign-funded enterprise, and clarify the procedure of recording establishment and change of status of enterprises.
Listed companies introducing strategic investment of foreign investors is included into recording management
One of the highlights of the revised catalogue is that it further narrows the coverage of reviewing the establishment and change of status of foreign-funded enterprises. Except that domestic companies, enterprises or natural persons merge the overseas companies which they lawfully set up or control with related domestic companies, the catalogue includes the establishment and change of status of foreign-funded enterprises which are not involved in special administration measures on access, including listed companies introducing strategic investment of foreign investors, into recording management.
Sun remarked that this reform greatly streamlines procedure of foreign mergers & acquisitions, actually cuts institutional transaction costs, and further improves legalization, internationalization and facilitation of business environment.
In the opinion of Sang Baichuan, director of the Institute of International Business at the University of International Business and Economics in Beijing, the catalogue further narrows the coverage of reviewing the establishment and change of status of foreign-funded enterprises, reflecting that China’s administrative approval system reform absorbs foreign funds. Many fields will not be reviewed anymore, but will face standard recording system.
As for including listed companies introducing strategic investment of foreign investors into recording management, Sang added that “under the background that the globalization development of economy encounters setback and international direct investment is also amid fluctuation, China hopes to push forward development of China’s capital market through attracting international direct investment. A great number of foreign investors hope to invest in Chinese listed companies. But there were many restrictions over the review and approval before, which restrained the scale and speed of foreign funds invested in China’s capital market. Adjustment in the catalogue will enable them to join in construction and development of China’s capital market and provide them with more opportunities. This also indicates that foreign funds are still rosy about development prospect of China’s capital market.”
30 restricted measures in service, manufacturing and mining sectors are reduced
The new catalogue relaxed restrictions on access for foreign investment in service, manufacturing and mining sectors. 63 restricted measures were kept, declining by 30 from 93 in the previous catalogue in 2015.
For example, in terms of service sector, restrictions on access for foreign investment in credit information and rating service, accounting and auditing, development and operation of large agricultural product wholesales market were cancelled.
As for manufacturing industry, restrictions in rail transit equipment, motorcycle manufacturing, edible fat and oil processing were removed. Regarding mining sector, restrictions in exploration and development of unconventional oil and gas such as oil shale, oil sand and shale gas were cancelled.
Encourage investment in R&D and manufacturing of VR/AR equipment
The catalogue expanded encouraging policy. There are 348 encouraging policies in the catalogue. When compared with the catalogue in 2015, 6 were newly added in projects like R&D and manufacturing of virtual reality (VR) and augmented reality (AR) equipment, R&D and manufacturing of key components of 3D printing equipment and construction of urban parking facilities, and 35 were revised.
Sun explained that the encouraging policies which were added and revised will promote the introduction of capital, technology and intelligence, encourage foreign investment to meet China’s industrial transformation and upgrade, and support foreign funds to participate in “Made in China 2025” strategy and innovation-driven development strategy.
“The coverage of encouraging policies was enlarged. More preferential and encouraging measures were offered to advance transformation and upgrade of manufacturing industry. With the booming development of intelligent producing and service system, technology and knowledge of foreign investors will produce spillover effect when they compete and cooperate with Chinese enterprises, which will help China to be leading in the fourth Industrial Revolution,” said Sang.
Translated by Vanessa Chen
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