The Improving Business Environment in China

The Improving Business Environment in China

by Zhou Yunlei

Ministry of Commerce, P.R.C

SECTION 1． China’s WTO accession and market opening

SECTION 2. Improving investment environment

SECTION 3. Huge Market potential SECTION 4. Recent development of Chin

a’s trade policy SECTION 5. Recommendation for invest

ment in China


Introduction of World Trade Organization:

World Trade Organization is described as “one of the three backbones” in the current world economic system (along with IMF and World Bank)


Market opening after China’s WTO accession

1. China’s tariff level has been reduced gradually, and China has phased out all its non-tariff restrictions on imports inconsistent with WTO rules


2. As one of the most important changes after China’s WTO accession, control on foreign trading rights has been removed completely.


3. Liberalizing Trade in Service

The overall level of China’s commitments has reached or even exceeded the level of some developed countries.


(1) Professional Services:

China gradually liberalized its professional services sectors such as accounting, legal and auditing service.


(2) Financial services: Banking: the Regulation of People’s Republic of

China on Administration of Foreign-funded Banks eliminated all the restrictions on geography and targeted customers to foreign banking institutions

Insurance: all the geographic restrictions to foreign insurance companies have been eliminated.

Securities: China will allow qualified foreign investment companies (including banks) to issue A shares (shares calculated in RMB) or issue corporate bonds and financial bonds calculated in RMB.


According to statistics, China has approved more than 200 foreign invested banking institutions, 70 foreign invested insurance institutions


1. Rule of law plays important roles in economic development of China.

2. Effective Macro-Control Measures 3. The control on foreign exchanges is grad

ually eased, and there’s no restriction on the amount of remitted profits for FIEs.

4. Improvement of basic infrastructure


1. Rule of law plays important roles in economic development of China.

(1) China established the transparency of legislation as a basic principle to be observed in China’s legislation formulation process.

The most important change in the newly issued Enterprise Income Tax Law is unifying the income tax rate for domestic and foreign enterprises

The Chinese Government has also established China WTO Notification and Enquiry Centre in the Ministry of Commerce


(2)． The Protection and Remedy of Right

Any citizens, legal person or other organizations can resort to remedy if his or her legal rights or interests have been infringed upon by a specific administrative act.


(3). Protection of Private Property was incorporated into the Law for the first time.


(4). Protection of Intellectual Property Rights The Chinese Government set as its priority

work to strengthen enforcement of laws to combat IPR infringements. A National Working Group on IPR Protection headed by Vice Premier

50 IPR service centers had been set up all over the country with the hotline "12312"


2. Effective Macro-Control Measures The Chinese government implemented a “m

oderately tight” monetary policy in time so as to alleviate the problem of over-investment and credit expansion


3. The control on foreign exchanges is gradually eased, and there’s no restriction on the amount of remitted profits for FIEs.


4. Improvement of basic infrastructure

SECTION 3. Huge Market potential

1. GDP Growth Rate Reached 11.4% in 2007

2. The Third Largest Trading Nation in the World

3. The most attractive developing country destination for foreign direct investment


4. Rapid Growth of Domestic Consumption

In 2007, domestic consumption surpassed investment in the contribution to GDP for the first time since 2000.


Year Domestic Consumption

Investment Net

Export

2005 38.2% 37.7% 24.1%

2006 39.2% 41.3% 19.5%

2007 39.7% 38.8% 21.5%


5. A Huge Luxury Market

120 million mobile phones, more than 8 million vehicles and 6.297 million laptop computers were sold in China within one year.

SECTION 4. Recent development of China’s trade policy

China encourages and guides foreign investments in high technology, modern services and modern agriculture.


1. The amendment of the “Catalogue for the Guidance of Foreign Investment Industry” in 2007.

2. Environmental Protection Is a Fundamental Policy of China

3. Greatly develop service sector, especially service outsourcing

4. Cross-border merge and acquisition will become a main form of enrolling FDI


1. The amendment of the “Catalogue for the Guidance of Foreign Investment Industry” in 2007.

Foreign investments are encouraged in (1).circular economy

(2).clean production

(3).renewable energy

(4).environmental protection

(5).integrated utilization of resources


Foreign investments are not encouraged in (1). key scarce or finite mineral resources

(2). projects, which are highly resource and energy-consuming and heavily polluting (3). real estate industry


2. Environmental Protection Is a Fundamental Policy of China

3. Greatly develop service sector, especially service outsourcing

4. Cross-border merge and acquisition will become a main form of enrolling FDI

SECTION 5. Recommendation for investment in China

1． Sectors encouraging foreign investment: 2． Important policies to encourage and su

pport the Development of SMEs’ 3．Main institutions and websites supportin

g foreign investment 4． Appealing process


1． Sectors encouraging foreign investment:

Please refer to “Catalogue for the Guidance of Foreign Investment Industry”.


2． Important policies to encourage and support the Development of SMEs’

Funds for supporting technological innovation for the technological small and medium-sized enterprises

Funds for SMEs Development Funds for international market exploration by SME

s Special funds for establishment of service system f

or SMEs.


3．Main institutions and websites supporting foreign investment

China Council for the Promotion of International Trade (CCPIT) (www.ccpit.org)

China Association of Enterprises with Foreign Investment (CAEFI) (http://caefi.mofcom.gov.cn/)

http://www.ccpit.org/

http://caefi.mofcom.gov.cn/




4． Appealing process A Coordination Office and a National Center

in will be established to deal with the complaints from foreign invested enterprises.

Thank You All, and Welcome to

China!