China has significantly loosened its restrictions on foreign investment across a range of business sectors, including oil and gas exploration, agriculture, and mining and manufacturing, by reducing the number of business activities that foreign businesses are barred from on its "negative list". The list has been on a downward trend for the past few years, falling from 180 activities in 2011 to 40 this year.
Every year, the National Development and Reform Commission and the Chinese Ministry of Commerce jointly review and publish the Special Administrative Measures for Access of Foreign Investment, as the list is formally known. It helps foreign investors, including Thai companies, understand which business activities they are permitted to engage in as well as evaluate relevant opportunities or market entry strategies.
"China welcomes foreign businesses to invest and develop in China. And we will continue to unswervingly expand opening-up, create a more open and business-friendly environment and protect the legitimate rights and interests of foreign investment," Meng Wei, spokesman for the National Development and Reform Commission, told the media recently.
"Our negative lists will only be shortened further. By the end of this year, China will lift all barriers to foreign investment not included on the negative list. And China will encourage more foreign investment in more fields, especially for the central and western regions," she added.
Reducing restricted activities on the list demonstrates China's efforts to make its economy more open. Increasing opportunities for foreign investment will promote steady growth in foreign capital inflows and enhance the long-term confidence of multinational corporations wanting to do business there.
According to the Ministry of Commerce, foreign direct investment (FDI) to China grew 6.8% year-on-year to 369.06 billion yuan (US$53.3 billion) in the first five months of 2019. As of May, manufacturing FDI in China reached 112.89 billion yuan, up by 12.4% year-on-year.
The World Investment Report 2019 published by the United Nations Conference on Trade and Development revealed that China was the world's second largest FDI recipient after the US, accounting for more than 10% of all global FDI. China's FDI increased 4% to $139 billion in 2018 from $134 billion in 2017. The shorter the negative list, the more these figures will continue to grow.
Suwatchai Songwanich is the CEO of Bangkok Bank (China). For more columns in this series please visit www.bangkokbank.com