At the regular press conference held on March 2, Shen Danyang, spokesman of the Ministry of Commerce (MoC), announced that the MoC will accelerate the amendment of the Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures, the Law of the People's Republic of China on Foreign Capital Enterprises, and Law of the People's Republic of China on Chinese-Foreign Contractual Joint Ventures and make the foreign investment law, which is expected to be submitted to the 2016 National People's Congress for deliberation. He said that great efforts will be made to further reduce the restrictive measures on access of foreign investment and guide and encourage foreign investors to make investment in the high and new technology, greening and environmental protection as well as modern service industries.

 

For a long time, China has been maintaining an overall steadily increasing trend in foreign investment inflows. In 2015, the foreign investment in actual use of China reached RMB781.35 billion, up 6.4% year-on-year (excluding data from the fields of banking, securities and insurances). The foreign investment attracted during the 12^th Five-Year Plan period increased by 30% compared to that during the 11^th Five-Year Plan period.

 

Shen said that, currently, cross-border mergers and acquisitions serve as the major ways for global foreign direct investment (FDI). In accordance with the statistics of the United Nations Conference on Trade and Development (UNCTAD), FDI through cross-border mergers and acquisitions accounted for a relatively high proportion in the global capital flows and, in the year with active mergers and acquisitions, the international capital flows always had a sharp increase. For example, in 2015, the global mergers and acquisitions increased by 61%, driving global FDI to increase by 36%.

 

In 2015, FDI through cross-border mergers and acquisitions accounted for 38% of global foreign investment. At the same time, overseas investors made a total investment of USD17.8 billion in China through mergers and acquisitions, accounting for only 14% of the total foreign investment inflows to our country. Obviously, although the mergers and acquisitions with foreign investment have been steadily increasing in China in recent years, it is still far below the international standard in terms of scale and proportion. In other word, the “merger and acquisition boom” has not come.

 

The MoC believes that it should actively provide support for foreign investment to participate in the reform of state-owned enterprises through mergers and acquisitions. Under the current circumstance that China has limited resource and energy carrying capacity, it will be helpful for activating supply stock, driving industrial transformation and upgrading and introducing world-leading management experience by encouraging mergers and acquisitions with foreign investment. In this way, the international competitiveness of Chinese enterprises will be further improved.

 

This year, the MOFCOM will make greater efforts to further expand utilization of foreign investment and improve efficiency of utilization of foreign investment.

 

Specific policies and measures are still under study and consideration, and preliminary ideas include: first, continuing to improve investment environment to make foreign investors more confident with investment in China; second, integrating utilization of foreign investment with transformation of economic development mode, industrial restructuring and regional structuring to give full play to the cooperative effect of foreign investment attracting, talent introduction and technology introduction; third, enhancing the construction of the legal system for foreign investment, accelerating the amendment of the three laws on foreign investment and making foreign investment law, which is expected to be submitted to the 2016 National People's Congress for deliberation; fourth, further reducing the restrictive measures on access of foreign investment and guiding and encouraging foreign investors to make investment in the high and new technology, greening and environmental protection as well as modern service industries to make up the short slab of China in supply of products and services in some fields.

 

Source: Translated from Invest Guangzhou, March 3, 2016