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Sep 13
2010

China eases restrictions on foreign investment

Posted by dbedell in RiskprotectionismGEforeign investmentforeign direct investmentFDIEuropean Council on Foreign RelationsEuropean Chamber of CommerceChinaCashAmerican Chamber of Commerce

dbedell

For multinationals keen to take advantage of the strong growth potential in Asia, changes to China’s foreign investment regulations might just make that a little bit easier.

According to a Reuters UK report, the country is in the process of reviewing its foreign investment catalogue—which lists those sectors and industries in which foreign companies or investors may invest.

However, the question is whether the development represents a deeper political change of will with respect to foreign investment, or whether it is simply a PR exercise to assuage foreign companies that have been complaining of the increasingly-protectionist bent in Beijing.

At a conference on European business and investment in Shanghai, Liu Yajun, Director-General of the Ministry of Commerce's Foreign Investment Department, said that the new catalogue would have fewer sector restrictions.

He said that the country’s official stance to foreign investment would not change, and investment must be mutually beneficial in order to be sustainable, according to Reuters.

This is a far cry from the domestic-leaning position of Chinese policies that have so-frustrated executives at companies such as GE over the past few months—as we discussed here and here.

The main point made by Immelt and other executives, along with the European Chamber of Commerce, the American Chamber of Commerce in Beijing, and the European Council on Foreign Relations (ECFR), is that there has been a decided slowdown in open-market reforms out of Beijing, and even reversals of some initiatives aimed at opening markets.

Liu also took some time at the conference to chastize those execs that have made public comments about perceived favouritism to domestic corporations.

The Telegraph in London reported Lui’s comments: “It is okay to complain from time to time. But you have to be practical and realistic. Some of the comments about China being closed to foreign business are exaggerated and hyperbolic.”

“We understand why the media says these things, but not companies,” he added.

No details have yet been released on what sectors will be opening up. Meanwhile the ECFR is circulating a paper to European heads of state urging them to coordinate policies on China.

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