On July 25, 2023, the State Council of China released and implemented the “Opinions of the State Council on Further Optimizing the Environment for Foreign Investment and Increasing Efforts to Attract Foreign Investment" (hereinafter referred to as the “Opinions"), with document number Guo Fa [2023] No. 11.

For the Chinese economy, the issuance of the Opinions are a strategic response to the challenges arising from both domestic and international market conditions. Its primary objectives are to address the rare downward pressure that the Chinese economy has faced in recent years, promote post-COVID-19 recovery of the Chinese economy, and draw foreign investment. Such efforts aim to inject new vitality into our country’s economic development, ensuring a more robust and resilient economy in the face of ongoing global uncertainties.

For foreign-invested enterprises already operating in China and foreign investors considering entering the Chinese market, the Opinions will further optimize China’s commercial environment and provide better investment conditions, making it more appealing for them to doing business here, with a view to attracting more foreign capital to China and deepening international cooperation.

Divided into several sections, this article intends to provide a concise analysis of the features of the Opinions, the benefits it brings to foreign businesses, and its key contents. Hopefully, through this interpretation of the Opinions, we may provide you with a deeper understanding of the features of this document and the significant implications it brings for the improvement and development of the environment for inbound investment.

I. Features of the Opinions

The Opinions, as an important policy document, has distinct features and values. This section looks at the characteristics of the Opinions from the perspectives of content, the sincerity behind its issuance, and its significance in connecting past and future, through which we attempt to show the importance of the Opinions.

1. Content

The Opinions are well-structured, comprising six measures further divided into twenty-four points. This document encompasses various industries, sectors, governmental departments and agencies, aiming to help achieve the national objective of providing a conducive environment for foreign-invested enterprises to operate and thrive in China, thereby bolstering their investment confidence.

The six measures are: (1) improving the effectiveness of utilizing foreign investment; (2) guaranteeing the national treatment for foreign-invested enterprises; (3) continuously strengthening the protection of foreign investment; (4) improving the easiness of investment operation; (5) intensifying fiscal and tax support; and (6) improving the ways to promote foreign investment. These measures complement each other, forming an integrated whole aimed at providing a better environment and conditions for foreign investment.

2. Sincerity behind the Issuance

It is notable that the Opinions were issued by the State Council, demonstrating how high attracting foreign investment is on the government’s agenda. Compared to previous documents released under the names of ministries under the State Council, such as the Ministry of Commerce, the People’s Bank of China, and the Ministry of Finance, this time, it is the State Council, instead of any ministry under it, that issued the document, showcasing a sincere and significant commitment to boosting foreign investment.

According to the presentation of Assistant Minister of Commerce during a regular State Council policy briefing, the Opinions can be characterized by four key aspects: expanding the breadth and depth of opening up to the world, improving the easiness of investment and operation, stepping up guidance for foreign investment, and strengthening the promotion, service and support for foreign investment. These four aspects, summarized from the government’s perspective, reflect China’s aspiration and welcoming attitude towards foreign capital.

3. Connecting Past and Future

Although the Opinions may not be an entirely new policy document and its content might not be extensive, it plays a crucial role in connecting the past and future in terms of optimizing China’s foreign investment environment.

As to connecting the past, it is worth noting that many policies in the Opinions are extensions and expansions of existing pilot programs. For instance, the implementation of the Qualified Foreign Limited Partnership (QFLP) investment pilot program has been proved effective in certain regions and therefore is now encouraged and expanded through new policies. Similarly, measures such as the opening up of value-added telecommunications services and the enhancement of roundtable conference systems are also being further advanced based on favorable results of pilot practices.

When it comes to leading into the future, despite its concise content, the Opinions are comprehensive and highly significant and can be regarded as the most crucial initiative in the field of foreign investment since the revision and reform of the Foreign Investment Law in 2019. It plays a distinctive role in sending positive signals to foreign-invested enterprises and highlighting the Chinese government’s determination and willingness to further expand openness and attract foreign investment.

II. Benefits for Foreign-invested Enterprises

The Opinions introduce a multitude of benefits for foreign-invested enterprises, aiming to further enhance the foreign investment environment and facilitate the development of foreign businesses in China. Below are the favorable aspects:

1. Enhancing Intellectual Property Protection

One of the crucial elements of the Opinions are the reinforcement of intellectual property protection. This policy will strengthen administrative protection and law enforcement concerning intellectual property rights, rigorously combat infringements against foreign-invested enterprises’ intellectual properties, and provide a more stable and reliable environment for intellectual property protection. The Opinions also encourage innovative financial practices, such as portfolio-based intellectual property pledging and intellectual property securitization, offering foreign-invested enterprises opportunities to fully leverage their intellectual property assets. This will greatly incentivize foreign-invested enterprises to invest in technology innovation and intellectual properties, thereby enhancing their competitiveness in the market.

2. Expanding Investment Scope

The Opinions broaden both the industries and the regions accessible by foreign investment. In terms of industries, the Opinions explicitly support inbound investment in fields such as biopharmaceuticals, value-added telecommunications, and investment companies. Regarding the geographic scope, several pilot rules extend from first-tier cities like Beijing and Shanghai to other cities. Such expansion will provide foreign-invested enterprises with more development opportunities and investment choices and allow them to engage more extensively in China’s economic development and industry upgrading.

3. National Treatment for Foreign Investment

The Opinions emphasize the principle of national treatment for foreign investment. Foreign-invested enterprises will legally enjoy the same treatment as Chinese enterprises, including participation in government procurement, equal involvement in setting standards, and equal access to supporting policies. This will further enhance the competitive position of foreign-invested enterprises and strengthen their development prospects in the Chinese market.

4. Enhancing Investment Operation Convenience

The Opinions call for enhanced convenience for investment operation, which includes facilitating the residence permits for foreign employees, easing data cross-border flow, and establishing a sound mechanism for addressing complaints from foreign-invested enterprises. These measures will provide foreign-invested enterprises with a more friendly operational environment, lower operational costs, and increased efficiency.

5. Greater Financial and Tax Support

The Opinions also emphasize the importance of financial and tax support. The government will promote the use of investment promotion funds, encourage reinvestment by foreign-invested enterprises in China, and support investment in areas encouraged by the country. This will provide foreign-invested enterprises with more financial and tax support and preferential policies, and encourage their long-term investment and development in China.

In summary, through strengthened intellectual property protection, expanded investment scope, national treatment, improved convenience of operations, and increased financial and tax support, the Opinions create a more stable, open, and profitable investment environment for foreign-invested enterprises. These favorable policies will further attract foreign capital into China, and provide excellent opportunities for foreign-invested enterprises to achieve greater success and growth in the Chinese market.

III. Summary of Content

The following is the summary of most of the important content of the Opinions.

(I) Improve the Effectiveness of Utilizing Foreign Investment

(II) National Treatment for Foreign-invested Enterprises

(III) Strengthen the Protection of Foreign Investment

(IV) Further Facilitate Enterprise Operation

(V) Intensify Fiscal and Tax Support

(VI) Improve the Ways to Promote Foreign Investment

IV. Conclusion

In conclusion, the Opinions, as an important policy document, exhibit distinct characteristics. It aims to provide a better environment and conditions for foreign investment, promote the safe production and smooth operation of foreign-invested enterprises in China, and thereby enhance their confidence in their investment in this country.

The issuance of the Opinions will have far-reaching impacts. Firstly, it will send a strong signal of China’s commitment to further opening up, demonstrating a positive intention to improve foreign investment environment. This will help attract more foreign capital into China and drive economic growth and industry upgrading. Secondly, the implementation of this document will provide a more stable, transparent, and convenient business environment for foreign investment, enhancing the competitiveness and development potential of foreign-invested enterprises.

Looking ahead, we hold an optimistic outlook for foreign investment prospects. The release of the Opinions will further ignite the enthusiasm and confidence of foreign-invested enterprises, attracting more high-quality projects and technology transfers. As China continues to deepen its reform and opening-up, strengthen intellectual property protection, and improve market accessibility, foreign investment will find broader development opportunities. We look forward to foreign investment achieving greater success in China, injecting new vitality into its economic development.