China to open wider to welcome foreign investment

BEIJING - China has reassured the rest of the world about its commitment to opening up in its latest move to attract foreign investment.

China should improve its investment and market environment, accelerate opening up to the outside world and lower operating costs, President Xi Jinping said Monday.

The country should "create a stable, fair, transparent and predictable business environment, and speed up efforts to build an open economy in a bid to promote the sustainable and healthy development of the Chinese economy," Xi said at a meeting of the Central Leading Group on Finance and Economic Affairs.

Foreign direct investment (FDI) into the Chinese mainland was basically stable in the first half of 2017, as the government continued to open up the market and seek a fair and transparent environment.

In the six months, FDI inflow edged down 0.1 percent year on year to 441.5 billion yuan ($65 billion), but the decline narrowed from that in the first five months, as foreign investment in June rose 2.3 percent to 100 billion yuan, according to the Ministry of Commerce (MOC).

The number of new foreign-funded companies rose 12.3 percent to 15,053 in the first half, with 2,894 new foreign companies set up last month, according to the MOC.

Foreign investment has played a significant role in China's economic development, promoting reasonable allocation of resources and driving market-oriented reform, Xi said.

The manufacturing sector attracted 128.6 billion yuan of foreign investment, up 3 percent year on year, accounting for 29.1 percent of total FDI, while FDI in the service sector reached 309.99 billion yuan, making up 70.2 percent of the total.

China should continue to make good use of foreign investment to advance supply-side structural reform, upgrade the economy, and catch up with global technology development, Xi said.

The influx of foreign investment into high-end sectors continued in the January-June period, with high-tech manufacturing seeing FDI rise 11.1 percent to 34.97 billion yuan, while foreign investment in high-tech services rose 20.4 percent to 64.72 billion yuan.

The 2017 China Business Report unveiled last week by the American Chamber of Commerce in Shanghai said that 77 percent of US companies in China remained profitable last year, up 6 percentage points from 2015, and 73.5 percent reported revenue growth, up 12 percentage points from 2015.

The report also pointed out that the surveyed firms still have concerns about transparency of China's regulatory environment, and lack of intellectual property rights (IPR) protection and enforcement. They also face operational challenges including high costs and domestic competition.

Laws, rules, and policies out of tune with the overall direction and principle of opening up should be abolished or revised within a time limit, and national treatment in laws and policies should be granted to foreign-funded companies after they enter the market, the president said.

He stressed the importance of protecting IPR, calling on authorities to better laws and regulations, improve the quality and efficiency of intellectual property examinations, and speed up institutional improvement for IPR protection related to emerging sectors and new business types.

Foreign firms should be able to invest more sectors in China. Last month, the government announced that it will use a "negative list" management approach for all foreign investment, open up more sectors and further relax restrictions for foreign businesses.

Starting on July 28, China will also implement a revised foreign investment catalogue, which includes the negative list as well as sectors and industries that the government wants to encourage foreign companies to invest in.

The catalogue shortens the list of sectors that are completely off-limits for foreign investment from 36 to 28.

Strong economic performance makes China an ideal destination for foreign investors. The economy expanded steadily by 6.9 percent in the first half of this year, well above the government's target for the year of 6.5 percent, official data showed Monday.