China is contemplating more measures to improve the overall business environment for foreign companies focused on the services sector, including a lower cross-border investment threshold, a leading think tank said on Oct 17.
The key objective of the blueprint under consideration is attracting more foreign investment despite China’s ongoing economic rebalancing.
“The aim is to build China as the world’s best investment destination in the eyes of foreign companies during the next five years,” said Wei Jianguo, vice-president of the China Center for International Economic Exchanges.
Reforms in the pipeline include a further reduction in the foreign direct investment threshold, the creation of more free trade zones and the rolling out of a nationwide negative list, said Wei, the former vice-minister of commerce.
The initiative comes at a time when foreign direct investment rarely showed drops in the first eight months, although new data in September showed a moderate rebound.
Global FDI inflows showed a sharp decline in 2016 to $1.52 trillion, down 13 percent year-on-year, along with a low-inflation global economy and weak recovery.
According to the Ministry of Commerce, in the first nine months, FDI inflows rose 1.6 percent, compared with a 0.2 percent drop during the January-August period.
“There were concerns on withdrawal of foreign investment during the past months, but the FDI inflow is still growing, which can offset the outflows while the FDI structure has improved,” said Zhang Jianping, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.
FDI in the manufacturing sector showed a rebound while the high-tech manufacturing and service industries maintained strong growth momentum.
“Most of the foreign companies that are leaving China are in low-end labor-intensive industries, while FDI inflows are shifting to high-tech manufacturing sectors as well as service sectors, especially the finance, education and healthcare industries,” said Zhang Yansheng, deputy director of the expert committee of the China Council for Promotion of International Trade.
By the end of September, the manufacturing sector had attracted FDI worth 181.76 billion yuan ($27.5 billion), up 7.5 percent year-on-year, accounting for nearly 30 percent of the total FDI, according to official data.
The services sector drew 428.2 billion yuan, or 69.2 percent of the total. Production and supply of power, gas and water rose 82.9 percent year-on-year.
Some 52.98 billion yuan flowed into the high-tech manufacturing sector, an increase of 27.5 percent year-on-year. The high-tech service industry attracted FDI of 91.59 billion yuan, up 24 percent year-on-year.