The British Chamber of Commerce in China welcomes the State Council’s Opinion on Optimising Investment Environment for Foreign Businesses and Increase Attraction for Foreign Investment. It emphasises the importance of attracting quality foreign investment, promises equal treatment and stronger support for foreign businesses as well as greater facilitation of their investment and operations in China. This is in line with the Chinese government’s repeated messaging this year that it continues to welcome foreign investment and is committed to further opening-up.
We are particularly encouraged to see the inclusion in this document of a number of points which foreign chambers, including the British Chamber itself, have been advocating for over the past few years. A few examples include:
- In the energy chapter of the British Business in China: Position Paper 2023, we noted that British businesses in China are taking actions to reduce carbon emissions and interested in purchasing electricity certificates and participating in cross-regional green electricity trading. We are glad to see that this point is included in the fifth measure of the Opinion and that the government is in support of the suggestion to facilitate foreign companies’ purchase of green power.
- In the Chamber’s Public Procurement report released in 2022, we called for the government to clarify the definition of the term ‘domestically produced’ and ensure equal treatment towards foreign companies. It is encouraging that this point was listed as the sixth measure in the document.
- The Chamber has also consistently called for the government to ensure foreign companies are involved in the country’s standard setting processes, such as in the automotive, financial services, and energy industries (concerning CCUS and hydrogen standards), as detailed in the respective chapters of the past few editions of the British Business in China: Position Paper. This suggestion is reflected in the seventh measure of the Opinion, and is particularly important as allowing foreign businesses to contribute to the standard setting process allows them to contribute their expertise and better adapt to new rules once enacted, as well as help to better align China’s standards with international ones.
- Policy objectives to facilitate foreign talents’ entry into China and encourage them to work in China, through measures such as offering tax benefits for foreign-invested enterprises and talents is also in line with a major advocacy point of the Chamber. This year in particular, we have expressed concerns to the Chinese government on a number of occasions over the potential cancellation of the tax benefits for foreign employees in the country as a result of the proposed Individual Income Tax Reform.
- Given the increasing scrutiny over cross-border data transfers in recent years, which has imposed burdens on foreign companies’ compliance, we have continued to feed back members’ concerns to the government on this issue and therefore are glad to see the 14th measure promises facilitation of cross-border data flows, along with a suggested green channel for foreign businesses on cross-border data.
Despite these encouraging indicators in the Opinion, we should also note that British businesses in China have gone through three years of the pandemic and many of them are still recovering under the current economic environment, and concerned about the weak domestic demand. Therefore, despite the positive signalling we believe that rebuilding trust and confidence will still take time.
It is also worth noting that some of the measures in the Opinion are not entirely new. Some examples include the promise to support foreign businesses in certain industries such as vocational education and gene and cell therapy, the intentions to attract international talents, and the exploring of mechanisms to facilitate cross-border data flows.
The Chamber believes that only if these measures are faithfully implemented, will we see continued recovery of foreign business confidence. Only then will this comprehensive and forward-looking document serve as a positive catalyst for enhancing the attractiveness of China as foreign investment and employment destination. The Chamber will continue to work with members to deliver good policy suggestions to the government that are based on members’ feedback in order to improve the business environment for British businesses and support the country’s economic recovery.