China's State Council issues a 24-point guideline to attract foreign investment

On August 13th, China's State Council issued a 24-point guideline covering six areas: 

-       Improving the quality of utilizing foreign investment.

-       Ensuring national treatment for foreign-backed enterprises.

-       Strengthening the protection of foreign investment.

-       Improving investment and business facilitation.

-       Increasing fiscal and tax support.

-       Upgrading the facilitating mechanism for foreign investment.

Increasing foreign investment in key areas and encouraging foreign enterprises and R&D centers to undertake major scientific research projects

Data show that in the first half of 2023, China's actual use of foreign capital is 703.65 billion yuan, down 2.7%. The Ministry of Commerce said that since the beginning of this year, the recovery of the global economy has slowed down so that affects the transnational investments. Coupled with the actual use of foreign capital growth rate of a high record 8% in the same period last year, we could see a slight decline but remains stable. 

The guideline made it clear that foreign-backed enterprises are supported to set up R&D centers in China to jointly carry out technological research and development and industrial application together with Chinese enterprises. Foreign-backed enterprises and their R&D centers are encouraged to undertake major scientific research and development projects.

On the premise of complying with relevant laws and regulations, accelerating the launching of foreign-backed projects in the field of biomedicine, encouraging foreign-backed enterprises to carry out clinical trials of overseas-listed cellular and gene therapy medicines within the country in accordance with the law, and optimizing the reporting procedures for applications for registration of listed medicines produced outside the country that have been transferred to the Chinese production of such medicines.

In addition to key areas, the guideline also proposed to broaden the channels for attracting foreign investment, including encouraging qualified foreign investors to set up investment companies and regional headquarters; supporting the regional transfer of foreign-backed enterprises through encouraging enterprises in the eastern region to pair up with those in the central and western regions and the north-eastern and border regions to carry out collaboration; upgrading the mechanism for promoting the foreign-funded projects construction.

Guaranteeing foreign enterprises the same treatment as Chinese enterprises through accelerating the revision of government procurement law and investigating acts of differential treatment towards foreign investors

Specifically, three initiatives are included.

First, foreign-backed enterprises should be guaranteed participation in procurement. Relevant policies and measures will be introduced to further clarify the specific criteria for "made in China". 

Second, supporting foreign-backed enterprises to participate in standard-setting on an equal footing.

Third, ensuring the support policies for foreign-backed enterprises on an equal footing. The guideline required that policies issued by localities to support industrial development and expand domestic demand shall not exclude or discriminate against foreign-backed enterprises and their products and services by limiting the brands, and shall not set additional conditions for the enjoyment of the policies by foreign-backed enterprises and their products and services, except for those expressly provided for in laws and regulations or in areas involving national security.

​Strengthening foreign investment protection by combating malicious cyber speculation and infringement of intellectual property rights against foreign enterprises

Responding to intellectual property rights and other issues that are of greater concern to foreign-backed enterprises, four initiatives are provided.

First, upgrading the mechanism for protecting the rights and interests of foreign investors. Upgrading the working mechanism for responding to international investment disputes. Combating malicious speculation that infringes on the legitimate rights and interests of foreign investors through the publication and dissemination of false, inaccurate and infringing information on the Internet, and investigating and punishing the relevant responsible organizations and persons in accordance with the law. Establishing and improving the provincial-level coordination mechanism for complaints by foreign-backed enterprises and promoting to resolve matters involving multiple departments or policy and systemic issues.

Second, strengthening administrative protection of intellectual property rights. The guideline called for improving the system of administrative adjudication of patent infringement disputes and increasing the enforcement of administrative adjudication. Strengthening the protection of intellectual property rights in the procurement of medicines and medical consumables; enterprises participating in procurement activities shall independently undertake not to violate the patent law and other laws and regulations. 

Third, increasing administrative enforcement of intellectual property rights. The guideline proposed to resolutely combat infringement of intellectual property rights of foreign-backed enterprises, and to carry out special enforcement actions against cross-regional and chain infringement violations. 

Fourth, regulating the formulation of foreign-related economic and trade policies and regulations. The guideline made it clear that the formulation of all kinds of foreign-related economic and trade policies and measures should focus on enhancing transparency and predictability, and the opinions of foreign-backed enterprises should be heard, and a transition period should be reasonably set for newly introduced policies and measures.

Optimizing immigration policies to facilitate foreigners and supporting Beijing, Tianjin, Shanghai, Guangdong, Hong Kong and Macao to provide data cross-border flow compliance services

To Improve investment and business facilitation, the guideline proposed to optimize the policies on the stay of foreign employees of foreign-backed enterprises. Continuously optimize entry and exit policies and measures, and provide foreign executives and technicians of foreign-backed enterprises and their family members with entry, exit and residence facilities. Directing our embassies and consulates in key capital-introducing countries or regions to facilitate visa applications for executives of multinational corporations, and promptly promoting the policies through our business organizations abroad. Facilitating the application for permanent residence of foreign senior management and technical personnel employed and recommended by qualified foreign-backed enterprises. Improving the convenience of applying foreigners' permanent residence ID in public transport, financial services, medical care, and online payment.

In response to the issue of cross-border flow of data, the guideline proposed to explore facilitated security management mechanisms for the cross-border flow of data. Establishing green channels for qualified foreign-backed enterprises, efficiently carrying out the outbound security assessments of important data and personal information, and promoting the safe, orderly and free flow of data. 

Optimizing the enforcement inspections of foreign-backed enterprises. The guideline made it clear that the proportion and frequency of random inspections will be further reduced for foreign-backed enterprises with low credit risk. 

Improving the services and guarantees for foreign-backed enterprises. A sound round-table system for foreign-backed enterprises will be established. 

In addition, increasing financial and tax support is also involved, including strengthening the financial guarantee for the promotion of foreign investment; encouraging foreign-backed enterprises to reinvest within the country; implementing relevant tax incentives for foreign-backed enterprises; and supporting foreign-backed enterprises to invest in areas that the state encourages the development of.

In terms of improving the way foreign investment is promoted, it is required to improve the working mechanism for attracting investment. A series of activities including "Year of Investing in China" will be carried out; facilitating the promotion of overseas investment; supporting regional investment promotion groups to go abroad on a regular basis to carry out investment promotion and participating in conferences and exhibitions, and invite foreign investors to China for investment negotiations; expanding channels for the promotion of foreign investment; optimizing the evaluation of the promotion of foreign investment, and effectively preventing the counterfeiting of foreign investment and unhealthy competition.