Creating a More Attractive Investment Environment

China's reform and opening up program is now in its 40th year. In the four decades since this pivotal program was launched，foreign capital has been an important factor in the rapid development of the economy and the dramatic rise in living standards. Through determined improvements in the level of market opening and the use of investment-friendly policies，China has become one of the major destinations for cross-border investment.

Foreign investment has not only filled China’s economy with much needed capital，it has promoted foreign trade，increased employment，and made important contributions to the expansion of China’s economy and the improvement of the quality of life. According to data released by the National Development and Reform Commission，foreign companies account for nearly half of combined imports and exports，one quarter of all industrial output，one-fifth of tax payments and one-tenth of all employment in China. Foreign-funded enterprises have significant benefits to the development of Chinese enterprises and industries. The competitiveness of China’s industry has been enhanced by the introduction of advanced production technologies as well as top grade management experience and high-quality talent. At the same time，the increasing sophistication of the manufacturing supply chain in China and the rapidly expanding domestic consumer market have provided a favorable operating environment for foreign companies. As a result，China and foreign companies have truly achieved win-win outcomes from investment in this country.

In the future，the door to China’s economy will not be closed. In fact，the degree of opening will become increasingly wider as China seeks to ensure an even more attractive foreign investment environment.

Changes in the Investment Environment

Different stages of the foreign investment program exhibited important differences. At the beginning of the reform and opening program，China hoped to use the opening policy to spur economic development by encouraging foreign investment. However，the results were limited. China was isolated from the outside world and foreign investors had little knowledge of the country’s business conditions. China’s economy was still undeveloped，with a limited degree of marketization and a weak industrial base. Infrastructure lagged and foreign investors still had many complaints about inconsistent and unnecessary regulation.  After Deng Xiaoping’s groundbreaking southern tour in 1992 ¨C credited with kickstarting a stalled reform program -- China’s foreign investment environment began to change. Around the country there were new efforts to attract investment and create jobs as local and provincial governments competed for the chance to host foreign-invested factories. By vigorously pushing ahead with projects in transport，telecommunications and energy，local officials made it clear that foreigners were welcome. At the same time，there were major changes in the legal framework，while regulatory and administrative reforms made considerable progress. Economic management also made steady gains.  Regions around the country competed to offer favorable conditions to attract foreign investment，creating specially designated investment zones，bonded zones，high-tech zones，and development zones. Foreign-funded enterprises entering China could often enjoy special privileges. At the same time，however，there were substantial restrictions on foreign investors，such as requirements for the use of local components，the need to work with local partners and commit to the transfer of technology. It can be said that the introduction of foreign capital at that stage was mainly to achieve specific economic development goals，such as increasing employment and developing foreign trade. The foreign investment environment was under strict state planning and regulation.

In 2001，China formally joined the World Trade Organization (WTO)，and the country’s efforts to attract foreign investment entered a new phase that was marked by significant efforts to improve the investment environment. The areas open to foreign capital were expanded and the service sector showed particular gains. In terms of creating sound investment laws and policies，considerable efforts were made to clarify relevant policy measures and local supervision of foreign investment. Laws and regulations helped meet WTO commitments and made domestic investment governance practices consistent with the requirements under the WTO framework. At the same time，the preferential treatment policies for foreign investment were gradually withdrawn. Local authorities paid more attention to introducing foreign capital in a market-oriented manner. In recent years，through the establishment of free trade pilot zones and the negotiation of foreign investment agreements，China has actively promoted the principle of national treatment and a ¡°negative list¡± management system whereby investment is permitted unless specifically restricted. Benefiting from an increasingly stable and transparent foreign investment environment，inflows of foreign capital grew rapidly. Since 1992，China has led developing economies in terms of attracting foreign investment and it has been in the top three investment destinations for all economies since 2008.

China has improved the local investment environment by gradually enhancing  local conditions while shifting from strict controls to a generally looser policy guidance. Capital inflows were initially directed at key cities and then expanded to regional and national levels.  Preferential treatment was offered to investors in specific industries.  A generalized system of preferences eventually guided foreign investment in accordance with the needs of industrial development. The rules for governing foreign capital extended from areas within the nation’s borders to those on the border itself. Ultimately，the domestic and international investment markets became increasingly integrated.

The Investment Environment Still Needs Improvement

China has achieved significant results in improving the foreign investment environment by upgrading its infrastructure and institutional environment. The World Investment Report 2017 released by the United Nations Conference on Trade and Development (UNCTAD) shows that China is one of the most attractive investment markets in the world. The nation’s manufacturing eco-system and world class infrastructure have created significant advantages in attracting foreign capital. A large consumer market with the potential for strong growth have provided long-term momentum in capital inflows. And the attractiveness of the local market has been shifting from cost factors to a more  comprehensive consideration of the nation’s advantages.

However，in other respects，there is much work to be done. According to the World Bank’s latest Doing Business 2018，which measures the business environment of 190 economies around the world，China’s business environment ranks just 78th. In this assessment，China lags far behind the United States and other Western economies，as well as Japan and South Korea. It also trails less developed economies such as Indonesia and Ukraine，and there has been little improvement in recent years under this kind of measurement. In this survey，阅读全部文章，请登录数字版阅读账户。 没有账户？ 立即购买数字版杂志