General

The Ministry of Commerce recently issued the "14th Five-Year Plan" development plan for the utilization of foreign capital. According to the plan, during the "14th Five-Year Plan" period, China will further relax restrictions on foreign investment in the fields of law, transportation, finance, information transmission, education, and medical care, and promote a higher level of opening up.

The plan is clear. During the "14th Five-Year Plan" period, China's utilization of foreign capital will rank among the top in the world. The structure of foreign capital utilization will continue to be optimized, and its linkage with foreign investment, foreign trade, and consumption promotion will be further strengthened. According to the expected quantitative indicators listed in the plan, by 2025, China will accumulatively use 700 billion U.S. dollars of foreign capital, and high-tech industries will absorb 30% of foreign capital.

An outstanding feature of the plan is to promote a higher level of opening up. In terms of reducing the negative list of foreign investment access, the plan proposes to continue to promote the expansion and opening of manufacturing, service industries, and agriculture, gradually relax restrictions on the proportion of foreign investment, and allow foreign holdings or sole proprietorship in more areas.

In terms of relaxing the barriers to entry in key areas, the plan proposes to promote the opening of related businesses in the fields of telecommunications, the Internet, education, culture, and medical care in an orderly manner. Promote relaxation of foreign investment laws, transportation and other industry business scope, personnel qualifications and other requirements. We will steadily promote the opening up of banking, securities, insurance, funds, futures and other financial sectors. Steadily deepen the opening up of the capital market and relax the conditions for high-quality foreign investors to make strategic investments in listed companies.

In terms of continuing to reduce market access restrictions, it is clear that the negative list for market access will be further reduced, and the warehousing and postal industry, information transmission, software and information technology service industry, leasing and business service industry, scientific research and technical service industry, and culture and sports will be reduced. And the entertainment industry and other fields, lowering the market entry barriers, etc.

In addition, the plan also makes arrangements for optimizing the use of foreign investment structure, strengthening the functions of open platforms, improving the level of foreign investment promotion services, improving the foreign investment management system, optimizing the foreign investment environment, and promoting international investment liberalization and facilitation.

According to data from the Ministry of Commerce, during the 13th Five-Year Plan period, in terms of U.S. dollars, China’s newly established foreign-funded enterprises and actual use of foreign capital increased by 61.8% and 10.4% respectively compared with those in the 12th Five-Year Plan period. From 6.7% in 2015 to 15% in 2020.