Protection for domestic brands ends while 5,000 foreign-invested firms enter China

BEIJING - As China's manufacturing sector increases the scope and pace of its opening-up, domestic industries are expected to upgrade themselves while foreign companies, too, eye many benefits, industry experts said.

"The manufacturing sector has consistently expanded the fields and raised the level of opening-up," said Huang Qunhui, head of the Industrial Economics Institute under the Chinese Academy of Social Sciences.

Among 609 sub-categories of the manufacturing sector, 96 percent were completely open to foreign investment, according to the Ministry of Industry and Information Technology or MIIT.

In 2017, the manufacturing sector attracted total foreign direct investment of $33.5 billion, while outbound investment by domestic companies in the sector totaled $120 billion.

MIIT data also showed that 4,986 foreign-invested manufacturing firms were set up last year, up 24 percent year-on-year. The main fields of foreign investment covered computers, integrated circuits, smart manufacturing and other high-tech sectors.

The sector's open attitude toward foreign investment "not only raised the country's own strength, but also provided handsome returns for foreign companies and institutions", Huang said.

Last month, China announced plans to open the automobile sector wider to foreign investment, with a timetable to phase out the shareholding limits for foreign investors.

Shareholding limits for special-purpose vehicles and new energy vehicles will be scrapped for foreign investors later this year, while those for commercial vehicles will be lifted in 2020, according to the National Development and Reform Commission, the country's top economic planner.

MIIT Chief Engineer Chen Yin said the ministry has been working with other departments on reducing automobile import tariffs "by a considerable amount," and would make the cuts public as soon as possible.

Opening up the automobile sector to foreign firms put an end to a "protection period" for domestic brands, said Dong Yang, vice-director of the China Association of Automobile Manufacturers.

"Instead of having huge impact on domestic automakers, wider opening up will be conducive to encouraging competition and pushing the industry to raise quality and efficiency," Dong said.

Industrial development depends hugely on global economic integration, said Chen.

"The Chinese manufacturing sector will further expand opening-up to stimulate the innovation of advanced technology, realize compliance with international economic and trade rules, and offer more and better investment opportunities to foreign firms," Chen said.

Miao Wei, the minister for industry and information technology, said that while continuing to uphold its stance on introducing foreign investment, the government also encouraged Chinese manufacturers to invest overseas.

By the end of last year, Chinese companies had invested more than $30 billion in overseas economic and trade cooperation zones, creating 258,000 local jobs.

"A pattern of all-round opening up of the manufacturing sector has come into being," Miao said. "The fundamental principle for China's manufacturing development was, is and will always be pursuing mutual benefits through open cooperation.

"China will continue to raise policy transparency and stability, optimize government services and improve the business environment for investors from all around the globe."