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The Chinese government is going to ease the restrictions for Chinese companies to invest overseas.
In the 2011 China Multinational Forum held on March 1, Kong Lingdong, director of the Foreign Capital Utilization and Overseas Investment Department, National Development and Reform Commission (NDRC), revealed NDRC’s cooperation with the Ministry of Commerce on the act on investment in overseas markets.
According to Kong Qingdong, the proposed act will ease the restrictions for the Chinese companies to invest in overseas markets.
Kong says that China already has Foreign Investment Enterprise Law but no laws or regulations about Chinese companies’ outward investment. “I hope one day there will be a complete set of laws which Chinese companies can follow.”
Companies that were willing to invest overseas have anticipated the regulation for a long while.
It is known that the Chinese government had issued some regulations concerning Chinese companies’ overseas investment, such as the Measures for Overseas Investment Management issued by the Ministry of Commerce and the Procedures for Administration of Foreign Exchange Involved in Investment Abroad issued by the State Administration of Foreign Exchange. These regulations played an important role in creating a profitable environment for Chinese companies investing abroad. However, the regulations were not able to meet the increasing demand of Chinese companies to “go out”. In fact, relevant administration departments attach considerable importance to monitoring instead of protection and encouragement.
All-China Federation of Industry and Commerce submitted the Proposal about Setting Regulations for Encouraging Chinese Companies to “Go Out” and Protecting Their Interests during the parliamentary sessions in March, urging the State Council to work out the act literally named Regulations for Promoting Investing Abroad to clarify the definition of overseas investment, examination process, capital flow, profit distribution, and taxation. It is recommended that the Law of Promoting Outward Investment should be enacted after years of practice.
Prior to that, Li Mingguan from the Ministry of Commerce said that the draft of aforementioned regulations had been finished. The regulations, as well as the supporting management measures, decentralize the rights of examining and approving outward investment, which can create better conditions for Chinese companies to invest abroad.
During the 12th Five-year Plan (2011-2015), the Chinese government will continue to encourage the Chinese companies to “go out”. Kong Lingdong said on March 1 that the NDRC will open the door wider for the Chinese companies to invest in the overseas markets.
From March, a Chinese company’s plan to conduct foreign natural resource-oriented investment should be examined by Ministry of Commerce if the investment amount reaches 300 million US dollars. Previously, the quota was 30 million US dollars. The investment in non-resources project is free of examination if the amount is below 100 million US dollars, nine times higher than previous 10 million US dollars. In addition, the central state-owned enterprises’ outward investment plans do not need examination.
Kong Lingdong says that the coming regulation not only weakens the restrictions but also makes outward investment profitable. A plan, which will provide solutions for the Chinese companies, is said to be under construction. The plan will involve solutions to the communication system with customs, commodity inspection department and so forth. In addition, various policies are needed to address the issues such as unbalanced development.
Chen Demin, Minister of Commerce used to say that the government would take more measures to encourage Chinese companies to invest abroad in the fields of natural resources, basic facilities, processing, and agriculture. The ultimate goal is to provide various Chinese multinationals with strong international competitive position.
According to data from Ministry of Commerce, China’s direct investment in foreign countries increased by 52% each year from 2002 to 2010. During the 11th Five-year Plan (2006-2010), Chinese companies’ outward investment increased by 25%, four times of the growth rate in the 10th Five-year Plan (2001-2005). In the year of 2010 Chinese investors invested in 3,125 foreign companies in 129 countries, with the non-financial foreign direct investment (FDI) amounting to 59 billion US dollars. By the end of 2010, the accumulative amount of non-financial FDI from China had reached 258.8 billion US dollars.
In the 2011 China Multinational Forum held on March 1, Kong Lingdong, director of the Foreign Capital Utilization and Overseas Investment Department, National Development and Reform Commission (NDRC), revealed NDRC’s cooperation with the Ministry of Commerce on the act on investment in overseas markets.
According to Kong Qingdong, the proposed act will ease the restrictions for the Chinese companies to invest in overseas markets.
Kong says that China already has Foreign Investment Enterprise Law but no laws or regulations about Chinese companies’ outward investment. “I hope one day there will be a complete set of laws which Chinese companies can follow.”
Companies that were willing to invest overseas have anticipated the regulation for a long while.
It is known that the Chinese government had issued some regulations concerning Chinese companies’ overseas investment, such as the Measures for Overseas Investment Management issued by the Ministry of Commerce and the Procedures for Administration of Foreign Exchange Involved in Investment Abroad issued by the State Administration of Foreign Exchange. These regulations played an important role in creating a profitable environment for Chinese companies investing abroad. However, the regulations were not able to meet the increasing demand of Chinese companies to “go out”. In fact, relevant administration departments attach considerable importance to monitoring instead of protection and encouragement.
All-China Federation of Industry and Commerce submitted the Proposal about Setting Regulations for Encouraging Chinese Companies to “Go Out” and Protecting Their Interests during the parliamentary sessions in March, urging the State Council to work out the act literally named Regulations for Promoting Investing Abroad to clarify the definition of overseas investment, examination process, capital flow, profit distribution, and taxation. It is recommended that the Law of Promoting Outward Investment should be enacted after years of practice.
Prior to that, Li Mingguan from the Ministry of Commerce said that the draft of aforementioned regulations had been finished. The regulations, as well as the supporting management measures, decentralize the rights of examining and approving outward investment, which can create better conditions for Chinese companies to invest abroad.
During the 12th Five-year Plan (2011-2015), the Chinese government will continue to encourage the Chinese companies to “go out”. Kong Lingdong said on March 1 that the NDRC will open the door wider for the Chinese companies to invest in the overseas markets.
From March, a Chinese company’s plan to conduct foreign natural resource-oriented investment should be examined by Ministry of Commerce if the investment amount reaches 300 million US dollars. Previously, the quota was 30 million US dollars. The investment in non-resources project is free of examination if the amount is below 100 million US dollars, nine times higher than previous 10 million US dollars. In addition, the central state-owned enterprises’ outward investment plans do not need examination.
Kong Lingdong says that the coming regulation not only weakens the restrictions but also makes outward investment profitable. A plan, which will provide solutions for the Chinese companies, is said to be under construction. The plan will involve solutions to the communication system with customs, commodity inspection department and so forth. In addition, various policies are needed to address the issues such as unbalanced development.
Chen Demin, Minister of Commerce used to say that the government would take more measures to encourage Chinese companies to invest abroad in the fields of natural resources, basic facilities, processing, and agriculture. The ultimate goal is to provide various Chinese multinationals with strong international competitive position.
According to data from Ministry of Commerce, China’s direct investment in foreign countries increased by 52% each year from 2002 to 2010. During the 11th Five-year Plan (2006-2010), Chinese companies’ outward investment increased by 25%, four times of the growth rate in the 10th Five-year Plan (2001-2005). In the year of 2010 Chinese investors invested in 3,125 foreign companies in 129 countries, with the non-financial foreign direct investment (FDI) amounting to 59 billion US dollars. By the end of 2010, the accumulative amount of non-financial FDI from China had reached 258.8 billion US dollars.