China Market Watch: Relaxed Foreign Investment Control and Liberalization of Stock Market
Further Relaxation of Control over Areas Open to Foreign Investment
On March 13, Chinese Minister of Commerce Gao Hucheng stated that China would further relax control of foreign investment. With the development of the One Belt One Road initiative, regions in Midwest China have become the new frontier of China’s opening-up. By focusing on developing the new Guiding Catalogue of Advantageous Industries of Foreign Investment of the Midwest China, technology, financial, education, cultural, logistics and other service sectors will enact measures to further remove restrictions for foreign investors to the high-end manufacturing sectors and actively encourage the participation in SOE renovation, transformation, and innovative development.
It was also announced that China is to make quicker progress in Free Trade Agreement (FTA) negotiations with the U.S. and Europe. Presently, the Sino-US investment agreement is in an advanced stage of negotiation over the negative list; the Sino-European FTA negotiation is also well underway. China made steps to open its economy to foreign investors when it entered the World Trade Organisation in 2001, but many commentators have said that it should have made more efforts since. With China not been involved in the Trans Pacific Partnership (TPP) arrangement, the proposed Sino-US/European FTA will open more trading and foreign investment opportunities for China.
China to Further liberalize Domestic Stock Market
On March 16, Premier Li Keqiang confirmed that authorities in China and Hong Kong are in the process of discussing proposals to link the stock exchanges in Shenzhen and Hong Kong this year. The Shenzhen-Hong Kong Stock Connect (SHKSC), a mutual market access program allowing Mainland investors to trade stocks listed on the Hong Kong Stock Exchange (SEHK) directly through the Shenzhen Stock Exchange (SSE), was expected to launch last year. Its launch may have been delayed by Chinese stock market price falls.
The Chinese government launched the Shanghai-Hong Kong Stock Connect in November 2014, aiming to link up the stock exchanges of Hong Kong and Shanghai, allowing investors in either exchange to trade on both stock markets.
Provisions On Duty-Free Shops to be Released this Year
On March 14, the Minister of Commerce Gao Hucheng announced the release of provisions on duty-free shops this year and carry out research on tax cuts for certain consumer goods. The measures aim to increase domestic spending of returning travellers as opposed to overseas consumption, via the means of additional duty free shops and reduction in import duties of certain consumer goods. In addition, increased domestic duty free allowance will be increased from RMB 5,000 to RMB 8,000. Since 2000, China’s rapid development of tourism and airport construction has spurred the rapid growth of the country’s duty free industry. However, an increasing number of Chinese nationals go abroad to buy goods in recent years. The latest provisions will make effort to repatriate spending, even though retail prices in China remain comparatively higher.
Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email email@example.com or visit www.dezshira.com.
Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.
An Introduction to Doing Business in China 2015
Doing Business in China 2015 is designed to introduce the fundamentals of investing in China. Compiled by the professionals at Dezan Shira & Associates, this comprehensive guide is ideal not only for businesses looking to enter the Chinese market, but also for companies that already have a presence here and want to keep up-to-date with the most recent and relevant policy changes.
Selling, Sourcing and E-Commerce in China 2016 (First Edition)
This guide, produced in collaboration with the experts at Dezan Shira & Associates, provides a comprehensive analysis of all these aspects of commerce in China. It discusses how foreign companies can best go about sourcing products from China; how foreign retailers can set up operations on the ground to sell directly to the country’s massive consumer class; and finally details how foreign enterprises can access China’s lucrative yet ostensibly complex e-commerce market.
Importing and Exporting in China: a Guide for Trading Companies
In this issue of China Briefing, we discuss the latest import and export trends in China, and analyze the ways in which a foreign company in China can properly prepare for the import/export process. With import taxes and duties adding a significant cost burden, we explain how this system works in China, and highlight some of the tax incentives that the Chinese government has put in place to help stimulate trade.
- Previous Article Strategische Erwägungen bei der WFOE-Gründung in China, Teil 3: Umsatzsteuer und Unternehmensführung
- Next Article Vertragskündigung bei Betrug im Lebenslauf