On 17 January 2017, the State Council released the Circular on Several Measures on Expanding the Opening to and Active Use of Foreign Investment (国务院关于扩大对外开放积极利用外资若干措施的通知) (Guidelines). The Guidelines set out the blueprint for China's policies on attracting foreign investment in the upcoming years.


According to the latest statistics from the Ministry of Commerce (MOFCOM), foreign direct investment in China recorded a growth of 4.1 percent in 2016. Although the investment amount has continued to increase each year, the growth rate has declined. The rising costs of production in China amidst the global economic slowdown have driven many investors from China to other emerging markets. Against this background, the Guidelines are generally seen as the central government's revived attempt to attract foreign investment by calling on various ministries to take concrete action to implement the principles set out in the Guidelines.


The Guidelines provide high-level guiding principles which include the following:

  • China will focus on liberalisation of the following sectors to foreign investment:
    • financial sectors, such as banks, securities companies, fund management companies, futures companies, insurance firms and insurance agencies;
    • accounting and auditing services, architecture design and credit-rating services;
    • manufacturing sectors, such as manufacturing of rail transportation equipment and motorcycles, edible fats and oils processing and production of fuel ethanol;
    • unconventional oil and gas production, such as development of shale deposits and shale gas; and
    • for Sino-foreign cooperative projects of oil and gas exploration, the current approval regime will be replaced by a record-filing system.

Most of the above changes have already been reflected in the latest draft of the revised Foreign Investment Industry Catalogue/外商投资产业指导目录(修订稿), which was issued in December 2016 (please refer to our earlier legal update "China Plans to Revise the Foreign Investment Catalogue" for details).

  • China will seek to open up to foreign investment, in an "orderly way", sensitive areas such as telecommunications, education, internet, culture industry, transportation.
  • Foreign-invested enterprises (FIEs) will enjoy favourable policies designed for the "Made in China 2025" strategy. In particular, foreign investment is encouraged in the following sectors to help upgrade traditional industries: high-end manufacturing, intelligent manufacturing, green manufacturing, industry design and innovation, engineering consultancy, modern logistics and inspection, testing & certificating services.
  • Foreign capital are encouraged to participate in infrastructure projects in China by way of concession arrangement, focusing on the following fields: energy, transportation, water conservancy, environmental protection and public utilities. Foreign-invested projects operated under a concession agreement will enjoy the same preferential policies as are available for domestic-funded projects.
  • FIEs are encouraged to set up research & development centres (R&D centres) and join the national science and technology program on equal terms with domestic entities. The favourable policies offered to domestic R&D centres and hi-tech enterprises are equally available to foreign investors.
  • China will continue its efforts in creating an equal playing field between foreign investors and domestic investors. In particular, the Chinese government will:
    • work towards a more fair environment for FIEs when they apply for permits/licences and participate in public bidding projects;
    • offer FIEs greater chance to participate in formulating industrial standards;
    • enhance intellectual property (IP) enforcement mechanism and have more international IP arbitration institutions to set up branches in China to better protect IP rights of foreign investors; and
    • explore diversified financing channels for FIEs, such as listing on the main board, secondary board, SME board or the new OTC market, and issuance of bonds by FIEs.
  • As part of the reform on the registered capital system, any minimum capital requirements must be removed for FIEs as long as they are not specified by law or administrative regulations.
  • The central government will grant greater autonomy to local governments on offering local incentives to attract foreign investment.
  • The Foreign Investment Catalogue in Central-and-Western China/中西部地区外商投资优势产业目录 is being revised, and foreign investment in central- and western-China and northeast China will enjoy more favourable policies in terms of tax, land grant and government subsidies.
  • FIEs in encouraged industries can continue to benefit from lower land use cost, which is set at 70 percent of the minimum land grant price.
  • China will continue to encourage foreign investors to set up regional headquarters in the country and will facilitate capital pooling among FIE group companies.
  • China will unify the administrative regime on foreign debt for both FIEs and domestic companies, and will further simplify relevant foreign exchange formalities.
  • China will push forward the "negative list" reform on foreign investment.
  • High-level foreign talents setting up hi-tech enterprises in China will, together with their families, be entitled to more preferential treatment in terms of residency status and visa policies.


The Guidelines serve as a guiding document which set out the main frame of reforms that China will roll out to attract foreign investment. Although the State Council has designated specific ministries to take charge in implementing these policies, it is unclear what detailed rules will be formulated under what time frame. According to news report, MOFCOM is now working with other authorities to form a time table of relaxation measures concerning financial industries. MOFCOM officials also indicated that reforms relating to sensitive sectors will first be tested in the free trade zones. While the issuance of the Guidelines is no doubt a welcomed move by Chinese government, foreign investors will need to wait and see what follow-up measures will be launched in the future.