China: China's State Council Announces Expanded Opening To Foreign Investment

Last Updated: 26 January 2017
Article by Lester Ross and Jennifer Zhao

On January 17, China's State Council published the Notice on Several Measures on Increasing of Openness to Foreign Investment and Active Use of Foreign Investment (Guo Fa [2017] No. 5). The notice is intended to expand China's openness to foreign investment into China. The notice coincides with President Xi Jinping's speech in support of globalization at Davos but the details remain to be specified.

The notice consists of 20 measures divided among three chapters as follows:

1. Increased openness to foreign investment

The restrictions on market access by foreign investment in such sectors as services, manufacturing, and mining are to be lifted through amendment of the Catalogue for the Guidance of Foreign Investment Industries (the Catalogue) and other Chinese policies and regulations.

In particular, foreign investment restrictions in key service industries including banking-type financial institutions, securities companies, securities investment fund management companies, futures companies, insurance institutions and insurance intermediary institutions will be lifted. Restrictions on foreign investment in accounting and auditing, architecture and design, and credit ratings will also be lifted while the telecommunications, Internet service, culture, education and transportation industries will be opened in an orderly manner.

In the manufacturing sector, restrictions will be removed on railway transportation equipment, motor vehicles, ethanol fuel, and oil and fat processing. Foreign investors will be encouraged to invest in high-end, smart and environmentally-friendly manufacturing.

Foreign investors are also encouraged to take part in infrastructure construction through public-private partnerships, establish research and development centers in China, and cooperate with Chinese companies as well as technology and innovation institutions. To this end, China will facilitate the formalities for qualified foreign personnel to work in China.

We note, however, that the changes announced late last year in the draft revision of the Catalogue were quite modest. For example, in the financial services sector, the draft removes only credit ratings out of the restricted category and deletes nationality requirements on the managing partners of accounting and auditing firms, while financial services industries such as banking, insurance, and securities remain in the restricted category, with foreign investment in securities joint ventures limited to a minority equity interest. Thus, the extent to which the notice promises a reduction in foreign investment access barriers is unclear.

Moreover, the notice, like the revised draft Catalogue, also does not reduce restrictions on foreign investment in many critical sectors like information technology, while paradoxically welcoming foreign investment in sectors like railway transportation equipment where domestic competitors have already become dominant.

2. Maintain fair competition between foreign-invested and domestic companies

The notice emphasizes equal treatment of foreign-invested and domestic companies with respect to implementation of relevant policies and regulations, government procurement, intellectual property protection, formulation of industry standards, and equity and debt financing. Enforcement agencies are directed to refrain from imposing arbitrary restrictions on foreign investment. Such changes would be highly welcomed by foreign investors if implemented as a recent survey by the American Chamber of Commerce in China ranks "inconsistent regulatory interpretation and unclear laws," "increasing Chinese protectionism" and "difficulty obtaining required licenses" as principal challenges to doing business in China.

3. Attract more foreign investment

The notice provides that local governments are authorized to formulate their own policies to attract foreign investment. The notice encourages foreign investors to locate investments in China's northeastern and central regions by granting preferential tax, land and financing treatment. It is unclear how willing foreign investors will be to invest in regions that have not been attractive to domestic companies.

The notice directs the competent departments under the central government to formulate and implement the details for each measure.

In a news conference held on January 6 by the State Council Information Office, Vice Minister of Commerce Wang Shouwen maintained that China remains the world's second largest destination for foreign investment, and that the concern that China's investment environment has grown tougher for foreign capital to compete with homegrown companies is untrue. Mr. Wang assured that, through adoption of those measures, foreign investors will be welcome as always and will be respected and treated equally with domestic companies. Mr. Wang commented that remittances of foreign capital (such as dividends and decrease of registered capital reductions) would not be trapped in China under recent capital-control measures, which are intended to curb short-term speculative money outflows.

Foreign investors are unlikely to be reassured by such commitments in the near to medium term. China has recently taken a series of capital-control measures to fight an increasingly severe cycle of capital outflows that have weakened the yuan since last August. Last November, the State Administration of Foreign Exchange instructed banks to sharply limit the threshold for approval by municipal-level foreign exchange regulators for capital remittances to $5 million, down from $50 million. Despite that, as reported by The Wall Street Journal, until now, few of China's capital control measures took obvious aim at foreign businesses. Foreign investors, especially non-strategic foreign investors in financial services sectors, are deeply concerned about the impact of China's clampdown on remitting their investment returns out of China.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions