MOFCOM released measures for further reform and opening up aimed at foreign investment stability amid the COVID-19 outbreak

On 1 April 2020, the Ministry of Commerce (MOFCOM) released the Circular on Further Expanding Reform and Opening up to Stabilise Foreign Investment in response to the COVID-19 outbreak (Circular). The Circular is one of a series of policies released by the Chinese government recently for the purpose of stabilising foreign investment amid the COVID-19 pandemic. It further strengthens and improves the formerly released policies and measures.

The Circular proposes 24 specific measures from five aspects, as shown in the table below:

The Circular puts forward three measures (Measures 1-3 in the above table) to address the prominent problems faced by foreign-invested enterprises in the current COVID-19 situation, for the purpose of helping foreign-invested enterprises to resume work and production. At the same time, the Circular also aims to stabilise the number of foreign-invested enterprises, expand the use of foreign investment and promote the increase of foreign investment, and proposes a series of measures to strengthen foreign investment services, facilitate administration and optimise foreign investment environment (Measures 15-24 in the above table). Specific examples include promoting online investment, coordinating COVID-19 prevention and control, international coordination and cooperation in economic and trade exchanges, implementing systems for foreign-invested enterprises to enjoy equal support under various types of support policies, promoting equal participation in standard setting and government procurement system etc., encouraging foreign investors to utilise profits in China to expand their investments, etc.

It is worth noting that the Circular covers a total of 11 measures in relation to reform and opening up (Measures 4-14 in the above table), which fully reflects the active and important role of reform and opening up in stabilising foreign investment. In terms of opening up, Year 2020 Negative List for foreign investment access is expected to be released earlier this year as compared to previous years, which will further reduce the number of prohibited and restricted industries for foreign investment and expand the opening up of financial services to foreign investment. The Catalogue of Industries for Encouraging Foreign Investment will also be revised at an accelerated pace to further expand the scope of encouraged foreign investment. The expansion will mainly target the fields of advanced manufacturing industries, emerging industries, high-tech industries, energy conservation and environmental protection, etc, at the same time, promoting free trade pilot zones, free trade ports, the pilot program for service industry, national economic development zones and regional opening. In terms of reform, the Circular further promotes the reform of “simplification of procedures, delegation of powers, combination of delegation and administration, and optimisation of services” in the commerce sector, and proposes 5 measures (Measures 10-14 in the above table) in order to ease the burden on enterprises and achieve the goal of reform and stabilising foreign investment.

As a comprehensive policy document, the Circular does not provide detailed rules for implementation of the relevant measures. It is therefore expected that the Chinese central and local government will follow up with and issue specific policies and measures to ensure the implementation of the relevant measures stipulated in the Circular. The Circular, however, reflects the PRC’s ongoing commitment to providing support and assistance for foreign investment in China as enterprises resume operations following this difficult period and plan for the future.