Or can imported instruments be purchased? State Council Executive Meeting: Equal treatment and support for domestic and foreign investment in large-scale equipment updates and government procurement

Facing the challenge of declining foreign investment, China makes another move to stabilise foreign investment

On 26 June, Premier Li Qiang chaired a State Council executive meeting to study the use of foreign investment. The meeting pointed out that foreign-funded enterprises play an important role in building a new development pattern, and that greater efforts should be made to attract and utilise foreign investment.

The meeting made it clear that it would deepen opening up in key areas, implement the “zero” requirement for foreign access restrictions in the manufacturing sector, launch a new round of pilot initiatives to expand opening up in the service sector, and support the participation of domestic and foreign-funded enterprises in large-scale equipment upgrading, government procurement and investment in a non-discriminatory manner.

Bai Ming, a member of the Academic Degree Committee of the Research Institute of the Ministry of Commerce, told VICAI that the manufacturing industry and the service industry are the two most important areas for attracting foreign investment, and the meeting emphasized the need to implement the full liberalisation of foreign investment in the manufacturing sector, and also made it clear that the opening up of the service industry would be further expanded. At the time of its accession to the WTO, China committed itself to opening up 100 subsectors in nine major categories in 2007, while it actually opened up close to 120 subsectors. Next, the opening up of China’s service industry will continue to increase, especially with the opening up of the financial industry, health care and pension industry and medical industry, which will bring greater opportunities for foreign investment.

The 2024 Government Work Report proposes to promote the renewal and technological transformation of all types of production and service equipment, and to encourage and promote the replacement of consumer goods with new ones. Preliminary estimates suggest that equipment renewal will give rise to a huge market with an annual size of more than 5 trillion yuan.

In March this year, the State Council issued the Action Programme for Promoting Large-scale Equipment Renewal and Consumer Goods Replacement, proposing that by 2027, the scale of investment in equipment in the fields of industry, agriculture, construction, transport, education, culture and tourism, and medical care will increase by more than 25% compared with 2023; the energy efficiency of major energy-using equipment in key industries will basically reach the energy-saving level, and the proportion of production capacity whose environmental protection performance reaches the level of Grade A will increase significantly, and the penetration rate of digital R&D and design tools and the rate of CNC of key processes for industrial enterprises above the scale of The penetration rate of digital R&D and design tools and the CNC rate of key processes in industrial enterprises above designated size exceed 90% and 75% respectively; the volume of recycling of end-of-life automobiles has approximately doubled compared with 2023, the volume of trading of second-hand automobiles has increased by 45% compared with 2023, the volume of recycling of used home appliances has increased by 30% compared with 2023, and the share of recycled materials in the supply of resources has been further increased.

The meeting clearly put forward equal support for domestic and foreign enterprises to participate in large-scale equipment renewal, government procurement and investment, etc., will undoubtedly inject greater confidence for multinational enterprises to increase investment in China. In Bai Ming’s view, the phrase “treating all enterprises equally” emphasises the need to give foreign investors national treatment and fair participation in China’s market competition.

The meeting also proposed to continuously improve the level of investment facilitation, optimise foreign investment policies in the fields of pharmaceuticals and medical devices, further strengthen the service guarantee mechanism, build the “Invest in China” brand, revise and release the new version of the Catalogue of Industries for Encouraging Foreign Investment, and improve the work convenience of foreign personnel.

Bai Ming said that in recent years China has been working to provide “one-stop” services and increasingly simplified procedures, as well as facilitating services and guarantees for foreign investors to enter China in terms of transport, talent, payment and other aspects. These efforts will continue to be promoted as important tasks this year.

Data from the Ministry of Commerce (MOFCOM) showed that from January to May 2024, 21,764 new foreign-invested enterprises were set up nationwide, a year-on-year increase of 17.4 per cent, while the actual amount of foreign investment used was RMB 412.51 billion, a year-on-year decrease of 28.2 per cent.

In terms of industries, the actual use of foreign investment in the manufacturing industry amounted to RMB 117.11 billion, accounting for 28.4 per cent of the country’s actual use of foreign investment, an increase of 2.8 percentage points over the same period last year. High-tech manufacturing industry actually used 50.41 billion yuan of foreign capital, accounting for 12.2 per cent of the country’s actual use of foreign capital, an increase of 2.7 percentage points over the same period last year. The actual use of foreign investment in intelligent consumer equipment manufacturing and professional and technical services increased by 332.9 per cent and 103.1 per cent respectively.

Zhan Yubo, director of the Research Department of the Institute of Economic Research of the Shanghai Academy of Social Sciences, believes that China’s attraction for foreign investment, from the original comparative advantage in terms of factor prices, into the later comparative advantage in terms of the market, and then to today’s China’s competitiveness advantage in the global industrial chain. For foreign investors, today’s development in China will face strong pressure from the competitiveness of domestic enterprises, but that’s precisely why most of them have to come to China in order to keep up with the trend of the industry and maintain their competitiveness.

China is encouraging China end uses for more domestic products in latest years. Thus, more and more overseas manufacturers are planning localization in China. BradyKnows localization team has extensive experiences in facility establishment, audit, supplier evaluation, manufacturing, registration, and marketing in China. Pls feel free to let us know any questions on China entry via info@bradyknowsmedical.com

Source：VICAI

Translated & edited： Bradyknow