On 13 August 2023, the State Council unveiled a set of 24 policy actions within its Opinion titled “ Opinions of the State Council on Further Optimising the Environment for Foreign Investment and Increasing Efforts to Attract Foreign Investment” (‘Opinions’).
The Opinions reflect the government’s active efforts to address core issues from foreign businesses, from improving foreign capital deployment, equitable treatment, increasing protection, streamlining investment procedures, and strengthening fiscal and tax support.
The Opinions strongly indicate the government’s support for foreign companies and their significant role in the economic recovery. We urge companies to prepare for upcoming policies and provide crucial insights for business planning.
National treatment for Foreign-Invested Enterprises (“FIEs”)
Fair Market Access
Ensure the participation of FIEs in government procurement activities to create a level playing field for all businesses and enable an equal opportunity for domestic and foreign businesses to compete for government contracts.
Transparency and Accountability
Build trust between businesses and the government by conducting special inspections to ensure fair participation and investigating any bias or prejudice.
Standards and Quality
Include FIEs and domestic enterprises in standardisation technical committees and the formulation of standards. Such a proposal ensures that different perspectives and expertise are considered and contribute to developing standards that benefit all stakeholders.
Non-Discrimination
Prohibiting exclusion or discrimination against FIEs or their products and services to prevent protectionist measures that could hinder international trade and investment.
Strengthening the Protection of Foreign Investors
Intellectual Property Protection
Strengthening administrative protection of intellectual property to ensure intellectual assets are protected – additionally, suggestions include:
- Improving the adjudication system for patent disputes.
- Enforcing administrative decisions related to IP rights to deter infringement activities.
- Investigating and punishing IP infringements against foreign investors.
Policy Transparency and Inclusion:
Standardising the development of foreign-related economic and trade policies while considering the opinions of foreign-invested enterprises. This call for an inclusive and transparent policy environment which will advance collaboration between government and businesses and reform policies to better reflect the needs of all stakeholders.
Protection of Rights and Interests
Ensuring a robust mechanism for the protection of foreign investors’ rights and interests to build trust and confidence. Examples of the mechanism include investigating and penalising malicious activities that harm foreign investors, such as spreading false information or exploiting their rights; governments create a safe and stable environment for investment. Equally, the Opinion proposes an establishment of provincial-level complaint mechanisms to provide a local channel for foreign investors to voice their concerns and seek resolution.
Facilitating Investment and Business Operations
Inclusive Economic and Trade Policies
Develop foreign-related economic and trade policies while considering foreign-invested enterprises’ opinions. Such a directive calls for an inclusive and transparent policy environment to advance collaboration between government and businesses and reform policies to better reflect all stakeholders’ needs.
Efficient Data Management
Streamlining security management mechanisms to facilitate better data flows. For businesses operating in the digital age, cross-border data flows are a critical aspect of their operation; providing convenient channels for qualified FIEs to conduct safety assessment for the transfer of necessary data and personal information across borders efficiently while ensuring smoother and more secure data transmission.
Reduced Compliance Burden
Optimising law enforcement inspections and reducing the frequency of random inspections for FIEs with low credit risks. Such an approach enables companies to focus more on their core operations and strategic initiatives rather than being disproportionately occupied with regulatory inspections.
Increasing Fiscal and Tax Support
Financial Advantages
The Opinions advise implementing tax preferential policies for FIEs, such as the import tax policies for supporting technological innovation and VAT refunds for purchasing domestically manufactured equipment. Moreover, it fosters the assistance for foreign individuals in enjoying preferential policies such as housing subsidies, language training fees, and children’s education fees in accordance with relevant national regulations.
Regional Development and Expansion
Supporting regions in implementing incentive measures for FIEs aligns, which incentivises investment in specific industries and promotes regional development objectives.
Horizons’ View
The Opinions urge local governments to form policies that support foreign enterprises. While certain foreign companies emphasise the need for further action, the Opinions offer precise directives for local government’s efforts.
Therefore, it is reasonable to expect forthcoming local policies to be released – so stay tuned for updates.
Contact Us
If you have questions or concerns related to the Opinions or foreign businesses, please contact us at talktous@horizons-advisory.com. to schedule a consultation session. Horizons can provide insight, expertise and the right solutions for you.
