China eases FDI rules, making approvals easier Go back »
2009-03-13 | All chapters
China eases FDI rules, making approvals easier
Zhou Xin & Jason Subler, Reuters, 12th March 2009
* China decentralises regulation of foreign investment
* Change comes amid downturn in FDI inflows
* EU Chamber of Commerce welcomes move, calls for improved transparency
BEIJING, March 12 (Reuters) - Beijing has devolved some authority for approving more foreign investment projects to local authorities, making it easier for foreign investors to set up shop in China, according to new rules published on Thursday.
The easing in regulations comes amid a slowdown in inflows of foreign direct investment (FDI). China drew $7.54 billion in FDI in January, the fourth straight month of decline from year-earlier levels.
Under the new rules, merger deals in most sectors with a price tag below $100 million only need approval from local commerce authorities, rather than the Ministry of Commerce in Beijing.
Sectors where foreign investment is "forbidden" or "restricted" will be excluded from the changes.
The relaxed rules, which came into effect on March 5, are aimed at "boosting domestic demand and promoting stable but rapid economic growth", the Ministry of Commerce said on its website.
Another relaxation in the rules is that foreign-funded automobile makers no longer have to apply to the Ministry of Commerce for permission to expand production -- they only need to notify local authorities when producing new models or increasing capacity.
The European Union Chamber of Commerce in China welcomed the move, saying that it hoped to see the introduction of more such policies that would, as it said, "help to build a level playing field for all businesses".
At the same time, it said it would welcome greater transparency of approval processes at the local government level and called for "substantial improvement" in that regard.
To read MOFCOM's announcement on this policy, please click here.
To view the European Chamber's comment on this announcement, please click here.