On January 17, 2017, the State Council published Circular Guo Fa [2017] No. 5 on Several Measures on Expanding the Opening-Up and Active Use of Foreign Investment, retroactive to January 12, 2017, setting out the principles for attracting foreign investment to China in the near future. 

Key proposals focus on China further opening market access for foreign investment regarding: 

  • services, by proposing to reduce restrictions on banks, securities and fund management companies; lifting restrictions on accounting and auditing services, architecture and design services, and credit-rating services; and promoting a step-bystep opening up of the telecommunications, internet, education and transportation sectors; and 
  • manufacturing, by proposing to lift restrictions on railway transportation equipment, motorcycles, oil processing, and ethanol fuel; reducing restrictions on unconventional oil and gas and mineral resources; and subjecting Sino-foreign cooperation projects in oil and gas areas only to record filing. 

The Draft Revised Guideline Catalogue on Industries for Foreign Investment published for public comments in December 2016 reflected most of these changes.[3]

Other proposals:

  • FIEs are treated the same as national companies in terms of tendering, governmental procurement and participating in formulating Chinese standards;
  • FIEs can be listed on the stock exchange to issue enterprise bonds, convertible bonds and other debt financing methods;
  • FIEs can access strategic policies, including the “Made in China 2025” policy and the relocating industry to western and central China policy;
  • Foreign investment can access infrastructure projects through concessions; 
  • FIEs are supported to establish R&D centers and given the same related incentives as domestic enterprises; and 
  • Multinational corportions' centralized operatuib if RMB and foreign exchange funds is pushed forward.

Inbound investment continues to grow but at a rate far from what China was used to. The Circular is an effort for China to regain its former position for attracting foreign investment. 

While this is encouraging, it is uncertain how these different developments will be implemented.

Date of issue: January 17, 2017. Retroactive date: January 12, 2017