Through a series of documents, including the Circular on Several Measures for Expanding Opening-up and Actively Using Foreign Investment issued by the State Council, the new version of Catalogue of Industries for Guiding Foreign Investment in amendment and the Regulations on Approval and Registration for Enterprise Investment Projects formally put into effect on February 1, the policies on the Negative List system, fair competition between domestic and foreign funds and improvement of the business environment toward a more transparent one are telling the world that: China is accelerating the steps toward a more easily accessible and orderly business environment.

 

At the end of the last year and the beginning of the new year, China has released a number of reform measures on foreign investment. Following the Circular on Several Measures for Expanding Opening-up and Actively Using Foreign Investment issued by the State Council and the amendment of the Catalogue of Industries for Guiding Foreign Investment, China’s first administrative regulations on investment in fixed assets, namely the Regulations on Approval and Registration for Enterprise Investment Projects was put into implementation on February 1.  What kinds of signals have China sent out to the investment market through these policies and measures?

 

Related researchers believe that these policies and measures put the concepts of Negative List, fair competition between domestic and foreign funds and transparent business environment into practice, trying to promote enterprises’ investment and stimulate the market's vitality by both deepened reform and expanded opening-up.

 

Release the power of market

 

“There are too many review and approval procedures, which take a lot of time and energy so that it may be too late to grasp the business opportunities after a business is established,” a person in charge of an enterprise told International Business Daily. Now, there are more business opportunities for the enterprises than that in the past, and the investment projects are more complicated. However, the business registration and other related administrative procedures cannot keep up with the pace of the enterprises so that they become highlighted obstacles to the enterprises’ investment.

 

 

Some officials in charge of the Legislative Affairs Office of the State Council and the National Development and Reform Commission (NDRC) also said bluntly, “Currently, there are indeed some problems in the management of enterprise investment projects, such as the wide scope for review, too many preconditions, unclear requirements and standards, long review cycle, non-standard intermediary services and the disguised role of project registration as administrative approval generally existing in actual practice. These problems urgently need standardization and management through improved administrative systems.”

 

The Regulations on Approval and Registration for Enterprise Investment Projects that was put into implementation on February 1 is known as China’s first administrative regulations on investment in fixed assets, manifesting a lot of concepts that are good for investment, such as transparent and predictable business environment, highly efficient and transparent procedures and national treatment for foreign investment. Coincidentally, public opinions are being solicited for the new version of Catalogue of Industries for Guiding Foreign Investment, in which the restrictive measures will be reduced from 93 to 62.

 

Zhang Jianping, director of the Regional Economic Cooperation Center of the Chinese Academy of International Trade and Economic Cooperation of the MOFCOM, told International Business Daily that, the concept of Negative List runs through the Regulations and the Catalogue, meaning that China’s investment management is stepping toward the Negative List era at a faster pace to stimulate the market’s vitality for investment.

 

Many analysts believe that, both the Regulations and the Catalogue indicate that the government is cutting the Negative List short to make great efforts to streamline administration and delegate power to the lower levels at the same time of enhancing in-process and follow-up supervision to stimulate the market’s vitality and promote investment through both opening-up and reform.

 

Simplify application procedures

 

The Regulations normalizes the project review and approval behaviors. It only requires review and approval management of enterprises’ investment projects related to national security and concerning important national productivity layout, strategic resource development and public interests. For the other projects, it requires management through registration. After a project is registered, there should be stricter in-process and follow-up supervision.

 

In addition, the review and approval and registration procedures have been greatly simplified. The enterprises can apply for review and approval for a project only with an application and related supporting documents as preconditions required under relevant laws and administrative regulations. For registration, they just need to provide the following information to the registration authorities: general information about the enterprise, name of project, construction site, construction scale, what will be constructed, total investment in the project and declaration on compliance with industrial policies. Moreover, in principle, the enterprises can go through these procedures through the on-line project supervision and management platforms established by the government, which have deadlines for the delivery of related services.

 

Xu Kunlin, deputy secretary general of the NDRC and director of the Department of Investment in Fixed Assets of the NDRC, said that the Regulations is a significant step for enhancing legal construction for investment and it will enable enterprises to have substantial autonomous right and play a dominant role in investment and create a more convenient, efficient and transparent investment environment for enterprises.

 

Zhang Jianping said that, the Regulations has clearly defined the scopes for review and registration, set the procedures and specified the in-process and follow-up supervision modes and therefore established a basic framework for enterprises’ investment. He said the key is how to put it into practice and stimulate the market’s vitality through system innovation. Specifically, in the process of investment promotion, the local governments should devote themselves to improving the software and hardware conditions, including: substantially promoting the streamlining of administration and delegation of power to the lower levels, improving service efficiency, providing better services, clearly understanding the needs of different industries, improving associated industries, providing better living facilities, and making more transparent local preferential policies and fully implementing them. In this way, more investors will be attracted.

 

Source: Translated from Invest Guangzhou, February 2, 2017