MOFCOM guidance for foreign investment in 2013: an incentive to invest in China

On April 4th, the Ministry of Commerce of the People's Republic of China (MOFCOM) has given its guidelines for foreign investment in China in 2013.

China plans to open up the services sector to foreign investment, and improve the environment for foreign investment in general. To this end, China has also indicated that it plans to introduce future amendments to the laws governing wholly foreign-owned enterprises (WFOE) and joint ventures.

The new objectives and actions require supporting policies and regulations before a real difference is felt by foreign investors. One area in which the changes are noticeable is in the area of ​​laws and regulations governing companies fully 100% foreign owned (WFOE), the equity joint ventures and cooperative joint ventures.

Main Actions for 2013

The guidelines are also developing various tasks for the local branches of MOFCOM:
- Open investment in service sectors, such as medical facilities and care homes
- Efficient use of capital markets in and outside of China and support bids in and outside of China by foreign qualified investment firms
- Regulate the development of FDI in real estate
- Improve the merger-control review system and improve the monitoring of mergers and foreign acquisitions
- Improve the investment environment and improve competitiveness to attract foreign investment
- Optimize the industrial structure of China, in particular to encourage investment in modern agriculture, high technology, advanced manufacturing, environmental protection, new modern service industries energy and encourage the establishment of regional offices, financial centers and shared service centers.

To succeed in the realization of these tasks the guidelines sets out the following general objectives to continue to attract foreign investment in China in 2013:
- Improve the investment environment in China and more open investment in the services sector
- To promote the transformation of foreign direct investment in China and the transfer of foreign investment in central and western China, and to use the regional structure of foreign capital
- Improve the environment for foreign investment, effectively protect the rights and interests of foreign-funded enterprises legitimate and strengthen the protection of intellectual property rights
-Stabilize the extent of foreign investment and improve the quality of foreign investment

Trends in foreign investment

According to data of the MOFCOM, the total foreign investment in 2012 was 3.7% lower than in 2011. However, the MOFCOM also asserts that the industrial structure of foreign investment has been optimized.

Investment in fixed capital injection by foreigners rose by 10.72%, total exports and imports of foreign-invested enterprises (FIEs) rose 1.87%, exports of high technology products increased by 3 , 47%. Tax revenues from foreign participation increased 7.11%.

Manufacturing accounted for 43.7% of total foreign investment, with an increase in high-end manufacturing. The services sector accounted for 48.2% of total foreign investment, up 0.57% compared to 2011. Further research and development institutions in 2012 brought the total to over 1,800.