Recommendations from the State Council on Enhancing the Foreign Investment Environment and Strategies for Increasing Foreign Investment

To: Provincial and municipal governments, all departments of the State Council, and affiliated institutions.

 

Attracting and utilizing foreign investment is integral to our commitment to global collaboration and the establishment of an inclusive, open economy. To bolster the environment for foreign investors, refine our investment initiatives, and increase foreign investment, the following recommendations are set forth.

 

I. Primary Directives:

 

Inspired by the principles articulated in President Xi Jinping's vision for a modern socialist China, and in line with the resolutions of the 19th National Congress of the Communist Party of China, our priorities are:

 

1.       Uphold a balanced approach to progress and stability.

2.       Thoroughly embrace and actualize new developmental ideologies.

3.       Strive for the synergy between our domestic and international strategies.

4.       Create a world-class business environment, emphasizing market orientation, rule of law, and international standards.

5.       Fully leverage our country's expansive market potential.

6.       Endeavor to more powerfully attract and utilize foreign investment, thereby advancing our mission of global collaboration and comprehensive socialist modernization.

 

II. Advancing the Quality of Foreign Investment Utilization

 

1. Targeted Investment in Key Sectors:

l  Prioritize foreign investment in vital areas.

l  Back foreign enterprises to establish R&D centers in China, fostering collaboration with local businesses.

l  Accelerate foreign ventures in biopharmaceuticals, ensuring adherence to local laws. Encourage foreign enterprises to conduct in-country clinical trials for therapies previously approved overseas. Streamline the approval process for foreign-produced drugs.

l  Promote partnerships between foreign enterprises in sectors like advanced manufacturing, digital economy, and modern services with local vocational institutions for training and education.

 

2. Expanding the Service Sector:

l  Align with top-tier international economic and trade standards.

l  Augment pilot demonstrations and back innovative financing models using intellectual property rights, equity, and tangible assets.

l  Extend pilot programs for telecom services, keeping foreign equity below 50% for specific services.

 

3. Broadening Foreign Investment Channels:

l  Motivate qualified foreign investors to set up investment companies and regional hubs. Align these with the benefits designated for foreign-invested entities under national guidelines.

l  Deepen the Qualified Foreign Limited Partner (QFLP) pilot, streamlining foreign exchange management and supporting direct local investments with overseas-acquired renminbi.

 

4. Supporting Phased Relocation of Foreign Enterprises:

l  Use open platforms like free trade zones and national development zones.

l  Advocate for cooperation between eastern regions and central, western, northeastern, and border regions, fostering shared value and interest through collaborative industrial transfer. Establish customs supervision based on credit rating at the original location for relocated foreign enterprises.

 

5. Enhancing Foreign Investment Project Implementation:

l  Refine the operational mechanism for pivotal foreign investment projects. Amplify support in policy, services, and resources to expedite project execution.

l  Introduce incentives to drive green energy consumption, and facilitate foreign enterprises' participation in green certificate trading and inter-regional green power exchange.

 

III. Upholding Equal Treatment for Foreign-Invested Enterprises

 

1. Government Procurement:

l  Ensure foreign-invested businesses have a fair shot at government procurement as per legal guidelines.

l  Define "produced in China" criteria and explore innovative procurement methods, emphasizing global product leadership.

l  Revise the Government Procurement Law and ensure equitable treatment for all enterprises. In case of perceived injustices, foreign enterprises can voice their concerns, with financial departments addressing them lawfully.

 

2. Standard Formulation Participation:

l  Ensure foreign-invested companies can engage in standard-setting processes on equal grounds.

l  Advocate for transparency in standard formulation and modifications, allowing both domestic and foreign businesses to participate equally.

l  Drive the national-level standardization pilot program within the service sector’s expansion regions.

 

3. Policy Support Equivalence:

l  Local policies meant to spur industrial growth and demand should not discriminate against foreign entities, their offerings, or brand affiliations unless explicitly required by law or for national security reasons.

 

IV. Enhancing Foreign Investment Safeguarding

 

1. Foreign Investment Rights:

l  Elevate mechanisms safeguarding foreign investment rights.

l  Address international investment disputes effectively, bolstering prevention measures and improving resolution processes.

l  Combat false online narratives harming foreign enterprises’ rights and ensure violators are held accountable.

l  Establish a redressal system for complaints from provincial foreign-invested businesses to tackle multi-departmental or policy-related concerns.

 

2. Intellectual Property (IP) Protection:

l  Bolster administrative IP protection by refining the patent dispute system and improving enforcement.

l  Endorse IP stations at exhibitions to handle IP applications and prevent infringements.

l  Ensure businesses participating in medical product procurement respect IP laws. Any product found infringing IP rights will face appropriate consequences, including potential delisting.

 

3. Enforcement & IP Rights:

l  Intensify efforts against IP infringements, especially cross-regional and systematic violations.

l  Streamline the IP protection mechanism, expedite clear-cut cases, and enhance both online and offline law enforcement.

 

4. Standardizing Foreign Trade & Economic Policies:

l  When crafting foreign trade and economic guidelines, focus on transparency and predictability.

l  Consider feedback from foreign-invested businesses, and ensure new policies have reasonable transitional phases.

 

V. Enhancing Convenience in Investment and Operations

 

1. Foreign Employee Residence Policy:

l  Streamline entry, exit, and residency policies for foreign executives, technicians, and their families.

l  Enable easy visa applications for multinational executives through overseas Chinese embassies in key investment-focused countries.

l  Ease the process for senior foreign staff of certain foreign-invested businesses to obtain permanent residency, making their daily experiences more convenient in areas like transportation, banking, medical services, and online payments.

 

2. Data Cross-Border Flow:

l  Balance the Cybersecurity, Data Security, and Personal Information Protection laws while providing facilitated data flow for qualified foreign enterprises.

l  Initiate pilot projects in regions like Beijing, Shanghai, and the Guangdong-Hong Kong-Macao Greater Bay Area to ensure secure and compliant cross-border data movement.

 

3. Inspection & Enforcement for Foreign Enterprises:

l  Simplify supervision and risk evaluations, reducing oversight for low-risk foreign enterprises.

l  Combine various law enforcement inspections, such as safety and environmental evaluations, into a single streamlined process.

 

4. Support Services for Foreign Enterprises:

l  Introduce and enhance round table conference systems.

l  Establish a coordination mechanism to ensure smooth project implementation and offer guidance for tariff reduction under free trade agreements.

 

VI. Amplifying Financial and Tax Incentives

 

1. Protection of Foreign Investment Promotion Funds:

l  Centralize special funds management to bolster prominent foreign-invested projects.

l  Aid local governments in optimizing their foreign investment fund usage, focusing on pivotal industry chains.

 

2. Promotion of Reinvestment:

l  Offer tax breaks for reinvestments made by foreign investors within China, providing detailed application guidance and ensuring its proper implementation.

 

3. Tax Benefits for Foreign Enterprises:

l  Assist foreign nationals in obtaining tax exemptions for housing, language training, and education expenses.

l  Encourage foreign-funded research centers by providing tax breaks for technology innovations and domestic equipment purchases.

 

4. Investment in Nationally Encouraged Areas:

l  Back regions in offering rewards to foreign enterprises aligning with the Catalogue of Industries Encouraged for Foreign Investment.

l  Facilitate the tax-free importation of equipment for foreign investment projects, and execute relevant policies to further this cause.

 

VII. Enhancing the Approach to Foreign Investment Promotion

 

1. Investment Promotion Mechanism:

l  Launch and continue the "Invest in China Year" initiative to fortify the "Invest in China" brand.

l  Provide guidance to local authorities for foreign investment promotion and establish collaborative investment promotion mechanisms with foreign countries.

l  Advocate for regions to adopt flexible employment practices for foreign investment promotion personnel and build a diverse system with participation from the government, businesses, and various industry leaders.

 

2. Overseas Investment Promotion:

l  Support regular investment promotion trips by regional teams to engage overseas investors and bring them to China for discussions.

l  Offer multiple-entry business visas to foreign project personnel as needed.

 

3. Foreign Investment Promotion Channels:

l  Enhance interactions between Chinese embassies and prominent foreign businesses to highlight investment opportunities in China.

l  Collaborate closely with foreign economic, trade, and investment institutions to boost the roles of investment promotion agencies overseas.

 

4. Investment Promotion Evaluation:

l  Develop a comprehensive evaluation system for foreign investment promotion effectiveness, emphasizing genuine economic and social development contributions. Prevent the use of mere investment scale as a measure, guarding against superficial metrics and unhealthy competition.

 

VIII. Amplifying Organizational Execution

 

All regions and departments must unwaveringly adhere to the Party Central Committee and State Council's guidelines. It is crucial to enhance the foreign investment environment and actively attract foreign capital with a focus on stability and quality. Regions are encouraged to launch region-specific supportive measures to amplify the policy impact. The Ministry of Commerce will work alongside relevant departments to offer guidance, promote policies, and swiftly enforce measures, aiming to further improve the investment environment and bolster foreign investor confidence.

 

State Council

 

July 25, 2023

 

(Note: Some sections from the original text were omitted in this version.)