Endowed with confidence

China should enhance its appeal to foreign investment by establishing a law-based and internationalized business environment

Utilizing foreign investment is a key aspect of China's opening-up drive.

Cementing the foundations for foreign investment will not only allow foreign investors to keep contributing to China's growth, but also help China gain an advantage in the global institutional competition, accelerate the building of an open economic system, and maintain its position as a global manufacturing center. It is also of immense significance for the country to build a new development paradigm and seize the opportunities presented by the new round of industrial revolution.

First, China should expand high-standard opening-up.

At the core of high-level opening-up is institutional opening-up, which means to align with high-standard international economic and trade rules and standards in order to establish a high-level open economic system. China's goal is to establish a high-standard system of rules that facilitates free trade and investment, encompassing areas such as transparency, digital trade, competitive neutrality, government procurement, intellectual property rights, and environmental and labor standards.

However, China, which has a unique social system and economic model and is at a different stage of economic development compared with many Western countries, should not simply copy high-standard international economic and trade rules. Any rules that may endanger its national security or harm the overall economic interests of the country must be blocked.

Second, China should build a world-class business environment that is market-oriented, law-based and internationalized.

China should strive to create a market-oriented business environment where the market plays a decisive role in the allocation of resources. To this end, the country needs to fully guarantee national treatment and most-favored-nation treatment for foreign investors, remove unfair and discriminatory practices, and implement the negative list system for foreign investment, further relaxing restrictions on access to service industries.

To build a first-class business environment, it is necessary for China to ensure fair competition and access to infrastructure and various production factors needed by foreign-invested enterprises, and fully unleash the potential of its large domestic market, thus increasing its appeal to foreign investment.

Creating a law-based business environment calls for rolling out detailed implementation measures in accordance with the principles laid out in the Foreign Investment Law to ensure that foreign-invested enterprises can equally enjoy the same support policies as their Chinese peers, the lawful rights and interests of foreign investors are safeguarded, and there are smooth complaint channels to reduce the cost of protecting their rights. Efforts should also be made to cut unnecessary administrative supervision and inspection of foreign-invested companies to ease the burden on them.

To create an internationalized business environment, China needs to align with high-standard international rules for investment.

First, it is imperative for the country to comb through government subsidies and cancel the subsidies prohibited in the World Trade Organization Agreement on Subsidies and Countervailing Measures, treating domestic and foreign enterprises equally.

Second, China should create a level playing field for State-owned and foreign enterprises, and avoid crowding out foreign investment due to unfair competition.

Last, China needs to create a stable, transparent, predictable and fair policy environment for foreign investors, and improve the protection of the intellectual property rights of foreign-funded enterprises.

Third, China should forge a brand for "Investing in China".

Opening-up is a defining feature of contemporary China and a shining name card of the country to attract foreign investment. Facing ever-stronger de-globalization headwinds and a sharp contraction in foreign direct investment worldwide, China must uphold the banner of opening-up and seek to safeguard an open world economy, which is vital to stabilizing the expectations of foreign investors, attracting high-quality factors from around the world, and enhancing the quality of foreign investment.

Efforts should be made to upgrade regional open platforms such as free trade zones to build these platforms into the name cards for "Investing in China".

The country needs to build the Hainan Free Trade Port into a prime example of high-level opening-up, and turn the pilot free trade zones across the nation into magnets for foreign investment in high-end manufacturing and high-end services. Meanwhile, it should transform economic development zones into growth poles with complete support facilities for industries so that they are capable of leading regional high-quality development.

The country should strive to build comprehensive bonded zones into free economic zones for foreign investors in bonded processing and manufacturing as well as maintenance, and make key demonstration areas undertaking the transformation of the processing trade and national processing trade industrial parks into new hubs for high-level development of foreign investment. Besides, more steps should be taken to build Beijing's national integrated demonstration zone for greater openness in the services sector into a model for free and convenient investment of foreign enterprises in the service industry.

Fourth, China should improve the quality of foreign investment utilization. China should give full play to the role of foreign investment in driving innovative, coordinated, green, open and shared development so as to promote the construction of a new development paradigm where the domestic circulation is the mainstay and the domestic and international circulations mutually reinforce each other.

To achieve this, it is necessary to further expand its encouraged investment catalog, give incentives to foreign investors in mid-to-high-end manufacturing, high-tech, the transformation and upgrading of traditional manufacturing, modern services, digital economy and other fields. Efforts should be made to pool high-end factors and to support foreign enterprises in increasing research and development to spur innovation.

Last but not least, China should double down on efforts to build bases for receiving the industrial transfer of foreign investment in the central and western regions, encourage foreign investors to invest in the central and western regions, and promote the transfer of foreign investment in the processing trade to the central and western regions and the northeast, thereby boosting coordinated development among different regions.

China should also seek to attract more foreign enterprises with advanced green technologies to promote environmentally-friendly development. Moreover, the country needs to ameliorate the system for foreign enterprises to fulfill their social responsibilities, encourage them to participate in public welfare activities, and protect the rights and interests of their employees, thus promoting shared development.

The author is dean of the Institute of International Economy at the University of International Business and Economics. The author contributed this article to China Watch, a think tank powered by China Daily.The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.