Welcome to asiatradehub.com   

My ATH | Sign Up Now

Your Business To Business Portal


Home Asian Contents TradeHub Gallery BuySell Leads

Products Hub

China Investment Climate



General Detail

General Information

Economy of CHINA

Economy Overview

Economic Review

Market Overview

Economy of Hongkong 

Business Investment Tips

Investment Climate

Global Competitiveness Index



Civil Aviation





State Companies

Manufacturing Industry








Monetary Policy

Foreign Policy



Financial Sector

Global Trade

Trade Relations

Tax Structure

Tax System

Important Contacts

Important Contacts

 Previous Page

1 2 3 4 5 6

Next Page

Catalogue for the Guidance of Foreign Investment in Industries

China outlines its specific foreign investment objectives primarily through its Catalogue for the Guidance of Foreign Investment in Industries, most recently revised in 2007. China expects to publish an updated catalogue in 2011. According to Chinese officials, the catalogue is a static document. It is intended as a snapshot of policies in place at a given time, subject to revision at the government's discretion and supplemented by directives from various government agencies. The catalogue serves to help foreign investors understand China's complex industrial policy by delineating sectors of the economy where foreign investment is "encouraged," "restricted" and "prohibited." Investment in sectors not listed in the catalogue is considered permitted. China "encourages" investment in sectors where it believes it will benefit from foreign assistance or technology. Investment is "restricted" (often including equity caps that limit foreign ownership to a minority share) and "prohibited" in sectors that China deems sensitive, touch on national security, or do not meet the goals of China's economic development plans. 

Problems with the Catalogue

Foreign investors have expressed frustration that China does not systematically seek public input before updating the catalogue and offers little rationale for changes, although China has committed to doing so before finalizing the 2011 update. Chinese regulators are not bound to follow the catalogue and instead maintain the flexibility to ignore its guidance and restrict or approve foreign investment for other reasons. Even in encouraged and permitted sectors, regulations apart from the catalogue often specify additional restrictions on the specific forms of investment that are allowed. China may also adopt new regulations or make unannounced policy decisions that supersede the most recently published edition of the catalogue. 

Contradictions between the catalogue and other measures have confused investors and added to the perception that investment guidelines do not provide a secure basis for business planning. Uncertainty as to which industries are being promoted and how long such designations will be valid undermines confidence in the stability and predictability of the investment climate. As a consequence, the practical implications of listing a sector in a given category are uncertain.

China’s Foreign Investment Approval Regime 

According to the Interim Measures for the Administration of Examining and Approving Foreign Investment Projects, issued in October 2004 and still in effect, all proposed foreign investments in China must be submitted for approval to the National Development and Reform Commission (NDRC) or to provincial or local Development and Reform Commissions, depending on the sector and value of the investment. NDRC's approval process includes assessing the project's compliance with China's laws and regulations, its national security implications, and its economic development ramifications. In some cases, NDRC also solicits the opinions of relevant Chinese industrial regulators and "consulting agencies," which may include industry associations that represent domestic firms. The State Council may also weigh in for high-value projects in "restricted" sectors. 

Once NDRC approves a project, investors apply to the Ministry of Commerce (MOFCOM) for approval to legally establish a company. Foreign investors next apply for a business license from the State Administration of Industry and Commerce (SAIC), which allows the firm to operate. Once a license is obtained, the investor registers with China's tax and foreign exchange agencies. Greenfield investment projects must also seek approval from China's Environmental Protection Ministry and its Ministry of Land Resources. 

Mergers and Acquisitions and the Anti-Monopoly Law 

MOFCOM (or, depending on the sector and value of the investment, the provincial or local Department of Commerce) reviews all proposed mergers and acquisitions (M&A) by foreign investors. The Anti-Monopoly Law (AML) allows antitrust regulators to make decisions based on factors other than consumer welfare. The AML states that China will protect the "lawful activities" of state-regulated monopolies and does not clearly resolve whether state-owned enterprises (SOEs) are otherwise subject to the law's competitive provisions. The law states that China will set up a national security review process for proposed foreign M&A of Chinese firms, which China expects to establish in 2011. 

The Regulations Concerning Foreign Investors Acquiring Domestic Enterprises instruct regulators to consider an M&A's potential impact on "national economic security" when evaluating a transaction. Foreign M&A transactions that result in "actual control" of a domestic enterprise in a "key industry" or of a "famous trademark" or Chinese "time honored brand" are examined more closely. 

As of December 2010, MOFCOM had reviewed over 140 M&A transactions, approving 95 percent unconditionally and approving six transactions with conditions. All six M&A cases approved with conditions involved offshore transactions between foreign parties. MOFCOM rejected one transaction: Coca-Cola's bid to buy Chinese juice-maker Huiyuan. 

 Previous Page

1 2 3 4 5 6

Next Page

Currency Converter 

this amount
enter any amount
of this type of currency

scroll down to see more currencies
into this type of currency.

scroll down to see more currencies

Feedback | Contact Us | Link Us | Site Map Press Release Terms & Conditions | Important Contacts | Tender Gallery | Sales Agreement

About Us | Advertise With Us | New Visitors | Benefits | Buy/Sell Guide | Bidding Guidelines | Astro BuzzChat | Services | Members Login

  2000- Matrix net-on-line Limited , All Rights Reserved /Disclaimer