China plans to cut red tape to boost foreign investment
Reuters in Shanghai
China plans to gradually begin easing applications and approval procedures for foreign investors, the official China Securities Journal reported on Wednesday, citing remarks by a senior official from the Ministry of Commerce at a conference.
Deputy bureau chief of the foreign trade department Huang Feng said the ministry had selected pilot regions in which to trial a new regulatory regime that will streamline paperwork and auditing processes for foreign companies.
The pilot areas will include the capital Beijing, the country’s financial centre Shanghai, and the provinces of Jiangsu and Guangdong, the report said.
Foreign direct investment in China slowed last year but then reversed the decline in the first quarter of this year as confidence improved.
China drew US$38.3 billion in foreign direct investment in the first four months of this year, up 1.21 per cent from the same period last year.
However, economists are concerned that increasing labour costs, high energy prices, weak intellectual property rights and a regulatory environment that maintains many restrictions on foreign firms is discouraging them from investing in the world’s second-largest economy.
The newspaper also quoted Ministry of Commerce spokesman Yao Jian, who said that the decline of profitability of foreign companies in China was due to a changing economic environment and increased competitiveness of domestic firms.