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China / View

Fair competition key to FDI

(China Daily) Updated: 2016-10-11 07:53

Premier Li Keqiang recently chaired a meeting of the State Council, China's Cabinet, in which further simplification of procedures for inbound foreign direct investment was confirmed.

Given that increased foreign investment in China has long been viewed as a weathervane of its integration into the global system and that there has been news from time to time about the exit of foreign-funded enterprises from the mainland, the new move will create a better environment for foreign enterprises and help retain foreign investment.

The cumbersome administrative procedures foreign enterprises previously faced when starting projects in China proved a hindrance that kept some foreign investment projects outside the door. Now, all such projects, exclusive of those included in a 2015 foreign investment list of those required to have special access management, need only be put on record instead of gaining approval in advance.

Such a change of approach is expected to greatly lower the entry threshold for foreign investors and improve the services provided by the government, thus boosting foreign enterprises' enthusiasm to invest in China.

The influx of foreign investment and technologies over the past decades has contributed a lot to the fast growth of China's economy and its integration into the global economic system. Yet the changed external economic environment and the relocation of some foreign investments from China to other economies over the past years, as a result of China's slowed economic growth, its rising labor costs and declining preferential treatment for foreign investors have raised questions about how long China can retain foreign investments as a way of maintaining its long-term economic competitiveness.

Now, China does not need to offer foreign investors the preferential treatment it previously offered, but it should not remain indifferent to their reasonable appeals, such as gaining equal protection and treatment with their Chinese counterparts. More importantly, an open and transparent environment for competition is needed.

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