China’s National Development and Reform Commission (“NDRC”) has signalled that China will continue to both promote foreign investment and expand outbound investment. These objectives and measures to achieve them are spelled out in the NDRC’s 12th Five-Year Plan on Foreign Investment Utilization and Outbound Investment (“Plan”), which was promulgated on 17 July 2012.

The Plan is broadly consistent with China’s recent investment policies. However, based on the Plan, foreign investors in China may expect additional governmental support in various areas, such as in obtaining foreign loans, setting up new-energy industries and establishing purchasing centres. Environmentally-friendly technologies and financial services are two of the industries that might expect significant support.

Foreign Investment Utilization

Objectives

According to the Plan, China will enhance the efficient use of foreign loans and promote the stable development of foreign investment in China. During the 12th Five-Year Plan period (ie, 2011 to 2015), the main objectives for foreign investment utilization are: 

  • effectively utilizing foreign loans from foreign banks and other overseas financing, such as finance leases and bond issuance to make better use of the funds in China; and
  • upgrading foreign investment by, among other things, promoting structural optimization and scientific innovation.

 Measures

The Plan further elaborates the measures to achieve the above objectives. The measures include: 

  • Allowing qualified enterprises to issue bonds in the international financial market
  • Actively utilizing private equity investment
  • Encouraging foreign investment to focus on areas such as:
    • high-end manufacturing
    • high-technology
    • energy-saving
    • emissions reductions
    • new-energy
  • Encouraging foreign investment in areas such as:
    • logistics
    • software development
    • engineering design
    • occupational skills training
    • information consulting
    • technology service
    • IP right service
  • Further improving foreign investment in areas such as:
    • banking
    • securities
    • insurance
    • telecommunication
    • gas
    • logistics
  • Gradually opening to foreign investors the areas of:
  • Encouraging foreign investors to establish in China:
    • regional headquarters
    • research and development centres
    • purchasing centres
    • financial management centres
  • Encouraging foreign funds to participate in areas such as:
    • medical
    • culture
    • tourism
    • family services
    • innovation design

Outbound Investment

The Plan also stresses that China will expand outbound investment. The measures include:

  • Actively participating in energy and mineral resource development projects
  • Encouraging qualified enterprises to cooperate with foreign institutions in technology development projects
  • Encouraging the acquisition and establishment of international sales channels
  • Encouraging outbound investment of industries such as telecommunication, logistics, culture, tourism
  • Encouraging outbound investment in steel, minerals, smelting and wood processing industries in countries that have ample energy and mineral resources