Procedures for foreign investment simplified
The current robust foreign investment in China is expected to maintain its momentum as the central government streamlines procedures and decentralizes approval rights.
Overseas investors will no longer be required to submit investment feasibility reports if they decide to set up business in China.
At the same time, government departments will be required to respond within 20 days to applications from overseas investors.
A spokesman from National Development and Reform Commission (NDRC) said China's ongoing reform of its investment system will create a more favourable environment with simpler procedures.
The current changes simply deepen reforms that started in July. The efforts are aimed to enable businesses, instead of governmental organizations, to make final decisions on investment and the market to allocate resources.
In line with State Council's efforts, the NDRC, which approves large-scale foreign investment, issued an updated approval procedure for overseas investment in October.
The spokesman said the reform will also give China's provincial governments more say on approvals of foreign investment projects, which are divided into four categories: those are encouraged; those are permitted but not encouraged; those are limited and those are forbidden. For example, those that will cause environmental pollution are forbidden.
Provincial governments will have the right to authenticate projects worth less than US$100 million, up from a top limit of US$30 million.
In addition, for projects still limited, the benchmark for provincial government approval will also be raised from US$30 million to US$50 million.
Jing Yunchuan, member of the Canada-China Business Council told China Daily that the reforms will give investors greater freedom to make their own decisions and ultimately make them responsible for their own bottom lines.
Jing, also a lawyer from the Beijing-based Gaotong Law Firm said the government should play a bigger role in protecting investors' legal rights, while using macroeconomic controls and intermediary organizations to build a sound investment environment.
"Enterprises, banks and the government will play different and more independent roles after this round of investment reforms. Especially the banks, not governments, which will have a decisive say on whether they will lend money," said Jing.
Foreign investors generally welcomed the reforms, but some complaints lingered.
"I think it is great and encouraging seeing that the Chinese Government is taking such a proactive role in helping foreign enterprises and the new policies are all heading in a good direction," said James Jao, president of the US-based Jao Design International.
Jao Design has now opened branches in several cities, riding the wave of the country's urbanization boom.
But he said more efforts are needed.
Foreigners often get confused with a myriad of regulations in China. It is good to streamline the layers of approval as much as possible."
He also suggested the government should set up a hotline to answer questions quickly.
Despite the complaints, China's foreign direct foreign (FDI) investment in October was up by over 53 per cent on the previous year, bringing 2004's total so far to more than that for the whole of 2003, which stood at US$53.5 billion.
Actual FDI was US$53.8 billion in the first 10 months, an annual rise of 23.47 per cent, according to the Ministry of Commerce.
The World Investment Report 2004, released by the UN Conference on Trade and Development (UNCTAD) in September, predicted FDI would hit US$60 billion this year, compared with US$53.5 billion last year.