To encourage foreign investment, the Chinese government is exempting foreign-funded enterprises from government approval for many proposals in the Shanghai Free Trade Zone.

Wang Shouwen, assistant minister of the Ministry of Commerce of China, says that the ministry is analyzing whether this approach can be applied to the whole country in order to improve the investment environment.

Some take the view that the investment environment in China is deteriorating. China is conducting anti-monopoly investigations of foreign enterprises including Microsoft, Qualcomm and Benz, raising widespread concern in the business community. On the subject of the investigations, Shen Danyang, a spokesperson for the Ministry of Commerce, said that anti-monopoly probes have become the norm in the international community. Foreign-funded and domestic companies are both treated equally before China's Anti-trust laws. “There is no xenophobia," says Shen.

Still attractive to foreign investments

Experts say that China is still the first choice for international investment, ranking top among the developing countries. In terms of this ranking, Wang points out that utilized foreign capital grew up by 5.3 per cent to USD117.6 billion last year, ranking 2nd in the world and 1st in the developing countries. China has been the first choice for international investment for 21 years.

In addition to relatively low-cost labor and land, China benefits from excellent infrastructure, a comprehensive range of industrial facilities, and enormous market, and reasonable economic policies. As the process of reform accelerates, foreign-funded enterprises will benefit from additional reforms.

Groundless fears: foreign investors withdraw

Statistics released by the ministry revealed that newly established foreign-invested enterprises numbered 2276, up by 14 per cent year on year; and the application of foreign investment reached USD 7.81 billion, down by 17 per cent year on year.

The decrease of actual use of foreign investment stirred concerns that foreign enterprises are withdrawing from China. But Wang said that a survey of chambers of commerce of foreign enterprises including The European Union Chamber of Commerce in China showed that 85 per cent of foreign-funded enterprises are making profits in China and more than 90 per cent of foreign enterprises want to expand their business in China.

In a sampling survey sponsored by the United Nations Conference on Trade and Development, and directed towards investment promotion organizations in various countries and major transnational corporations, China is still the most attractive country to most foreign investors.

“This shows that the investment environment is improving, not worsening,” says Wang.

Qiu Lixin, deputy director of the ministry's department of foreign investment administration pointed out that growing numbers of foreign investors, including the Fortune 500, not only think highly of existing conditions in China, but also rate its market potential.

Further advangtages in China

“The reform of registration systems in industry and commerce, led by the State Council, has enhanced investor confidence about China,” says Qiu.

Statistics indicate that in the first half of 2014 the newly-attracted foreign investment reached USD63.3 billion, newly established enterprises exceeded 10 thousand, and contractual foreign investment exceeded USD117.3 billion, up by 2.2 per cent, 3.2 per cent and 9.5 per cent respectively.

“Further opening up set by the Third Plenary Session of the 18th Communist Party of China Central Committee will provide foreign enterprises with more opportunities,” says Wang.

In addition, the ministry is taking measures to improve the investment environment, combining The Law of the PRC on Foreign Capital Enterprises, The Law of the PRC on Chinese-Foreign Equity Joint Ventures, and The Law of the PRC on Sino-Foreign Contractual Joint Ventures, with The Law on Foreign Investments.

The article is edited and translated from《外企在华将领更多“改革礼包”（市场观察）》, source: People's Daily Overseas Edition, author: Zhao Pengfei