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China to relax foreign investment restrictions

January 14, 2019

The nation will seek to address difficulties faced by foreign companies investing in the country, according to an interview given by Beijing’s Commerce Minister.

According to Reuters, Zhong Shan revealed on the Ministry of Commerce’s website that China will relax its restrictions on foreign investment through various measures. These include allowing full foreign ownership of companies “in more areas of the economy,” as well as reducing the number of industries in which foreign investment was either barred or restricted.

Reuters argued that “the comments appeared to be largely reiterations of past pledges by Chinese officials for further market opening.”

Foreign direct investment into China, or FDI, rose by 3 percent year-on-year, Zhong added, reaching $135 billion (€117.8 billion) in 2018; this reportedly represents a slowing down of growth rates, which hit 4.1 percent in 2016 and 7.9 percent in 2017.

Reasserting his optimism, however, Zhong explained that total FDI around the world had fallen by 41 percent in the first half of 2018, and that China was maintaining a stable FDI growth “against a gloomy global climate.”

The push to open up opportunities for private and foreign firms and investors came about after what Reuters terms “weakening domestic demand” and the much-publicised trade war with the USA. According to Zhong, one of the Commerce Ministry’s main priorities for the coming year is “properly handling” these frictions with the United States, with a desire to “conscientiously implement” the consensus of working towards the resolution reached by Presidents Xi and Trump late last year.

As part of the widening of opportunities, Zhong confirmed the Ministry would be pushing for the introduction of a foreign investment law, as well as improving its handling of complaints from foreign firms, and encouraging more investment from abroad, particularly in the manufacturing and high-tech industries. It would also seek to encourage foreigners to invest in the central and western China regions.

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