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China’s Foreign Investment Policies After WTO Accession

China’s WTO accession means it will adopt an even more vigorous liberalisation policy. With regard to law, China has, in accordance with WTO requirements, reviewed its existing foreign-related laws and regulations and made necessary amendment in a bid to create a standardised and transparent legal environment for FIEs. Where foreign investment contracts are concerned, the provisions on foreign exchange balance, trade balance, local content, export  performance  and technology transfer have been cancelled.

China’s Foreign Investment Policies-Industries Opened to Foreign Investment
Industries opened to foreign investment are mainly in the service sector. Under its WTO commitment, China has liberalised its telecommunications, banking, insurance, securities,  foreign trade, transportation, distribution, tourism, audiovisual, architecture, legal service, accounting, medical and advertising sectors in phases after accession. Meanwhile, the education, health service, urban infrastructure, and mineral resources prospecting and exploitation sectors have also been opened further.

China’s Foreign Investment Policies-Removal and Liberalisation of Restrictions on FIEs
According to China’s WTO commitment concerning market access to its trade in services, the financial, telecommunications, distribution, tourism, education, transportation, medical and  healthcare, architecture, environmental protection and entertainment sectors have been basically  opened to foreign investors after accession.

China’s Foreign Investment Policies-Various Forms of Foreign Investment
Apart from encouraging foreign direct investment, China will also expand the scale of drawing foreign investment through build-operate-transfer (BOT),transfer-operate-transfer(TOT), project  financing, and merger and acquisition (M&A). In addition, it will explore and encourage ways of absorbing foreign capital through industrial investment funds and risk investment funds.

China’s Foreign Investment Policies-Further Opening of Securities Market
There are many Sino-foreign joint venture enterprises among the companies listed on China’s stock market, but no wholly foreign-owned enterprises or foreign-funded investment  companies  have issued shares on the mainland yet. Under the policy of national treatment, China will allow eligible foreign companies to issue shares in the A and B shares market. There are no legal obstacles to the listing of FIEs in China. The China Securities Regulatory Commission is working on the operation details.

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