One of the biggest things our China lawyers do for clients is setting up a China company. When clients come to us seeking to set up a company in China, one of the first things our China lawyers look at is whether the client’s proposed business activity is allowed to be performed in China by a foreign company.
China has widespread restrictions on foreign participation in various industries. These restrictions and prohibitions are reflected in a “negative list” of industries restricted or outright prohibited to foreign investment. The status of a client’s planned business activity in China on the negative list is one of the first things that must be considered before making plans for a China company. In addition, there are many special rules and separate regulations, as well as unwritten rules which impose additional restrictions on certain types of businesses such as restrictions on foreign exchange or cryptocurrency trading.
Beginning in 2018, our China lawyers have noticed implementation of new policies on opening up market access to foreign investment and promoting use of foreign capital in investment. According to official statistics, over 14,000 foreign invested enterprise were established in China, in the first quarter, that’s a 124.7 % increase over the same period last year.
This trend is boosted by new policies to reduce some restrictions on foreign investment. For example, the People’s Bank of China recently announced a decision to reduce access restrictions on foreign invested payment institutions. This change will allow foreign payment processing providers to operate in China for the first time.
In a meantime, local governments at the provincial level are also taking action to further open the market for foreign investors. Beijing, being the capital of China, recently issued several new rules reducing the market access of foreign investment on several different business areas including science and technology services, internet and information service, culture and education services, financial services, commercial and tourism services and health and medical services. Beijing is open for business.
These changes in foreign market access are opening up new opportunities for foreign companies to get in to China. China is seeking ways to encourage foreign companies to do business in China both as a means to boost economic growth, as well as to move China up the manufacturing value chain, and increase quality of domestic offerings in service industries.