Monday, 25 July, 2016

China Temporarily Deregulates Free Trade Zones to Attract Foreign Investments

To open up its domestic markets and attract more overseas capital, the Chinese government has relaxed restrictions imposed on foreign investment. Investment rules have been eased in four free trade zones (FTZs), namely Shanghai, Tianjin, the southern province of Guangdong and the southeastern province of Fujian, according to a document released by the State Council on 19 July 2016.

The new round of deregulation allows foreign investors to establish wholly foreign owned enterprises (WFOEs) in the Chinese market. Foreign investors will now have access to sectors that were previously heavily regulated, such as logistics, education, tourism, entertainment, publishing, shipping, transportation, automobile, and mineral and agriculture.

A total of 51 items have been revised, temporarily allowing foreign investment in the four FTZs to go through a registration-based process rather than a lengthy review-and-approval process (specific industries will still be subject to regulations under the relevant authorities).

In the past, different stakeholders and observers, such as chambers of commerce, foreign trade agencies and global companies had complained about the long-winded approval process and restrictions on foreign investment, as the Chinese government showed bias towards domestic firms. This new policy will encourage foreign investors to set up highly efficient firms and allow the market to become more competitive. In the meantime, it is also good news for foreign investors who want to gain access to China’s attractive market. 

This article is written by Yingyi Zhong. If you have any questions on China's free trade zones, please contact Rosario.



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