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The facts and China's position on China-US trade friction

China Daily | Updated: 2018-09-26 08:00

China Markedly Relaxes Market Access for Foreign Investment

China revised the Catalogue for the Guidance of Foreign Investment Industries in 2015 and 2017. Restricted measures have been reduced by 65% to 63 items, and only 28 items are left under the prohibited category. On June 28, 2018, China for the first time published Special Administrative Measures for Foreign Investment Access (Negative List) 2018, reducing restrictions from 63 to 48, and introducing new opening up measures in 22 sectors. China has notably expanded market access in areas of interest to FIEs. In manufacturing, foreign equity caps will be lifted for the shipbuilding industry, including design, production and repair, and the airplane industry, including trunk airliners, regional jets, utility aircraft, helicopters, drones and lighter-than-air aircraft. In the automobile industry, China will remove foreign equity caps on manufacturing of special-purpose vehicles and new energy vehicles, and phase out those on all automotive ventures over the next five years. In the financial sector, China has lifted foreign equity caps for banks, and raised the cap to 51% for securities, fund management companies, futures and life insurers. All the foreign equity caps in finance will be removed by 2021. Market opening has attracted more foreign investment into China. On July 10, 2018, Shanghai Municipal government and Tesla signed a memorandum of cooperation which will allow Tesla to wholly own its first super factory built outside of the US, in Shanghai. Foreign financial institutions are also speeding up efforts to explore the Chinese market. Since 2017, 14 foreign institutions such as Fidelity, UBS Asset Management, Man Group, Fullerton, Blackrock, and Schroeder have registered as private securities investment fund managers in China. On June 29, 2018, the world's largest hedge fund manager, Bridgewater Associates LP, concluded its registration as a private fund manager in China and officially launched its private fund business in the market. The WTO noted in the report of trade policy review on China that the country remains one of the top foreign investment recipients and its inward FDI has kept rising for many years.

That the US administration accuses China of "stealing" advanced technologies is an insult to China's efforts to push for scientific and technological advances. The Chinese nation is known for diligence, intelligence, and ingenuity. The Chinese government sets great store by the development of science, technology and education. The progress in science and technology China has made comes from years of implementing a strategy of invigorating the country through science, technology and education and the strategy of innovation-driven development, and from the hard work of the Chinese people, especially scientific workers. Since 2000, the total R&D spend in China has registered an average annual growth rate of close to 20%. In 2017, China spent RMB 1.76 trillion in R&D, second only to the US, accounting for 2.13%15 of total GDP, and approaching the average level of the OECD countries. China has 2,613 institutions of higher education, 10,900 research institutions of all sorts, and over 6.21 million people engaged in R&D. In 2017, the full-time equivalent of R&D personnel in China reached 4.03 million man-years, of which 77.3%16 were in enterprises. In the same year, China ranked third after the US and Japan with 113 Chinese enterprises listed among "The 2017 Global Innovation 1000".17 According to the "Global Innovation Index 2018" released by WIPO in July 2018, China's ranking rose from 22nd in 2016 to 17th in 201818. In 2017, patent applications reached 3.698 million in China, of which 1.836 million19 patents were granted. China's invention patent applications reached 1.382 million, up by 14.2% year-on-year, ranking 1st in the world for seven years in a row20. According to WIPO statistics, China filed 49,000 international patent applications via the Patent Cooperation Treaty (PCT) in 2017, second only to the US. Among the top 50 international patent applicants, ten are Chinese enterprises. As former US Treasury Secretary and renowned American economist Larry Summers once said, "You ask me where China's technological progress is coming from. It's coming from terrific entrepreneurs who are getting the benefit of huge government investment in basic science. It's coming from an educational system that's privileging excellence, concentrating on science and technology. That's where their leadership is coming from, not from taking a stake in some US company."21

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