Beijing cuts red tape for foreign firms as it vies for investors
Regulation from 1995 requiring companies to set up representative offices in China scrapped, as vice-premier warns of new challenges ahead
As Washington prepares to unveil a corporate tax-cut plan, Beijing has scrapped cumbersome requirements on foreign businesses that have been in place for 22 years in its latest bid to woo investors.
The Ministry of Commerce on Tuesday said it had done away with a regulation from 1995 that required foreign companies to set up a representative office before they could operate in China, a process that involved months of complicated paperwork and formalities.
At a symposium the same day, Vice-Premier Wang Yang warned of new challenges ahead to make better use of foreign direct investment as the economy entered a “new normal” period, with its traditional low-cost advantage disappearing and slower domestic growth.
“[China] needs to innovate on FDI,” Wang said, vowing to shift investment focus to the service sectors, the central and western regions and to high value-added sectors.
“It needs to transform its cost advantages ... pay more attention to creating a level playing field after companies get access to the market, and to look more to M&As than greenfield investment,” he said.
Foreign direct investment fell by about 6 per cent in the first seven months from a year earlier in US dollar terms, raising concerns about China’s appeal as an investment destination and the state of the economy.