Chinese government cuts red tape, requirement to first set up rep office scrapped
October 3, 2017 Category Foreign investment, Weekly
The Chinese government 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 (MOFCOM) 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. 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 domestic growth slowing.
“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% in the first seven months from a year earlier in U.S. dollar terms, raising concerns about China’s appeal as an investment destination and the state of the economy.
China was ranked 27th out of 137 economies in the global competitive index for 2017-18 from the World Economic Forum – better than last year’s 28th place. But some foreign manufacturers have relocated their Chinese factories to other countries to reduce costs, while others are reluctant to invest more in the country because of economic uncertainties and obstacles to market access, the South China Morning Post reports.
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