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Excerpts from policy briefing on Jan 6

Updated: Jan 6,2017 8:22 PM

Wang Shouwen, vice minister of commerce, and Li Guo, vice minister of the General Administration of Customs, were invited to talk about the new guidelines on further opening-up and attracting foreign investment, which was passed by the State Council executive meeting on Dec 28, during the State Council policy briefing on Jan 6.

Three measures to attract foreign investment

Wang explained three main points in the new guideline. First, cut market access limitations for foreign investment in manufacturing, mining and service industries. Foreign companies will be more likely to invest in advanced manufacturing and set up R&D centers in China. More foreign talents will be encouraged to work in China.

Second, build a fair market for foreign companies. The circular urges authorities to effectively protect intellectual properties of foreign companies, and treat them equally with domestic companies in terms of products, government bidding and financing. Policy preference on domestic companies will be applied to foreign ones.

Third, local authorities are permitted to issue their own policies to attract and protect foreign investment according to law. Central, western and northeastern regions are encouraged to take over industries transferred from the eastern region.

Investment environment in China

The investment environment in China is not deteriorating, Wang said, citing a report from the United Nations, which shows that China is still the second most attractive investment target in the world.

China is working to improve the investment environment. For example, foreign companies which invest in industries or enterprises not included on the negative list do not have to ask for government approval anymore. China has passed rules that foreign companies should be consulted in policy-making and they can participate in setting national standards in China.

China’s policies are transparent, expectable and stable, he said.

Wang denied voices that investment returns in China are falling. He cited a report from the European Chamber in China, saying that two-thirds of European companies in China made profits in 2016.

Data from the National Statistics Bureau show the gross profits of foreign companies in the Chinese mainland have reached 1.5 trillion yuan in the first 11 months of 2016, a year-on- year increase of 10.8 percent.

China’s domestic demand is huge and growing, and the Chinese government has been issuing policies to attract foreign investment, which provide many opportunities for foreign companies, he said.

Balancing an open market and protecting national security

It is a fact that some sensitive industries will be more open, but China will make sure that risks to national security are controllable while attracting foreign investment, Wang said.

Specifically, the government will first test the opening of sensitive industries in free trade pilot zones. If it proves well — foreign companies are satisfied, economy is promoted and risks are manageable — it will be introduced to other regions, otherwise it will be suspended.

National security examination is a worldwide convention, and it is a consensus that economic development should not harm national security, he said.

Innovative customs reforms in pilot FTZs

Li Guo introduced efforts made by the General Administration of Customs (GAC) to facilitate related policies in regards to attracting foreign investment.

According to Li, the GAC has been committed to supporting the development of pilot free trade zones and increasing innovations in customs supervision and clearance. Among the more than 60 core measures recognized globally for trade facilitation, more than 50 of them have been settled in the Shanghai pilot free trade zone, where 52 percent of enterprises praised the facilitated clearance procedures, according to a report on satisfaction degree of trade environment.

Besides, the department has introduced intermediary organs to assist inspections and publish enterprises’ credits. Supervision mechanisms are also made in bonded areas to promote new-type business.

Efforts also were made to promote the successful experience of pilot zones. In 2014, 14 customs rules of Shanghai FTZ were promoted in the country, and now related departments are making new measures to support pilot free trade zones in seven provinces and cities that were approved last year.

New measures to facilitate clearance in 2017

Reform in regional customs clearance integration will be deepened to enhance efficiency and reduce costs of enterprises. Last year, the General Administration of Customs launched the reform, called “two centers and three systems,” in the Shanghai pilot free trade zone.

This includes one center on tariff administration and the other on risk prevention and control. Affiliated to the General Administration of Customs, they were established to make a unified and professional audit on declared goods and give standardized instructions on risk analysis and treatment.

The three systems mainly concern facilitated customs declaration, methods of enterprise declaration and a cooperative supervision mechanism.

According to those systems, enterprises can submit a customs declaration once to facilitate clearance. Also, they are allowed to pay taxes independently. And port and territorial customs across the country have more clear responsibilities.

The reform will greatly benefit enterprises, helping them cut costs and enhance efficiency, as they will be allowed to declare any customs in China that use unified clearance standards.

Credit construction on imports and exports

To create a viable environment for business, the General Administration of Customs has rolled out many rules to build a credit management system for imports and exports, and launched an online system and platforms.

The administration introduced differentiated management to enterprises according to their credibility. Those with good credit enjoy facilitated clearance and fewer inspections.

Such credit information will be integrated into the national credit system by working with other departments including the Ministry of Commerce and the People’s Bank of China. Dishonest enterprises will be punished by customs, and their business will be affected in other fields.

The administration also highlights international cooperation. China is promoting mutual recognition of authorized economic operator (AEO) status with other countries. China’s enterprises that have good credit will enjoy the same facilitated customs clearance in partner countries, which will help them abide by laws voluntarily.

AEO is an important system under the framework of the World Customs Organization. China has collaborated on this system with 31 countries and regions including Singapore, Hong Kong and the EU.

China’s customs will also carry out measures to help facilitate enterprises’ registration.