SwedCham China Insights for the Week of August 14 - August 18 , 2023

Top news of the week:

China publishes 24-point guidance to attract foreign investment

August 14, 2023

The State Council issued the “Opinions on Further Optimizing the Foreign Investment Environment and Increasing the Attraction of Foreign Investment” on August 13. With 24 items covering 6 areas, the latest policy update aims to attract and utilize foreign investment more efficiently as a response to the decreasing FDI.

Chinese Defense Minister attends Moscow security conference

August 15, 2023

Chinese State Councilor and Minister of National Defense Li Shangfu attended the 11th Moscow Conference on International Security on August 15, where he delivered a speech and expressed China's expectations in implementing global security initiatives. Li Shangfu also held bilateral meetings with the Russian Defense Minister, as well as defense departments and military leaders from Iran, Saudi Arabia, Kazakhstan, Vietnam, and other countries.

Chinese customs authorities roll out new measures to support comprehensive bonded zones

August 16, 2023

To support the high-quality development of comprehensive bonded zones, the General Administration of Customs on August 16 released 23 reform measures that aim to reform the business operation structure and optimize whole process supervision.

The 2023 (China) Eurasis Commodity and Trade Expo

August 17, 2023

The 2023 (China) Eurasis Commodity and Trade Expo opened on August 17 in Urumqi, Xinjiang Uygur Autonomous Region. The expo has three main exhibition areas: investment and cooperation, imported product, and commodity trade, covering an exhibition area of 70,000 square meters. It has attracted over 1,300 companies from more than 40 countries and regions to attend.

MOFCOM says probe into Taiwan authorities’ trade restrictions indicates alleged violations of WTO rules

August 18, 2023

According to the preliminary investigation results on trade barriers in Taiwan, the trade restrictions imposed by Taiwan on the mainland are not in line with the requirements of WHO principles and Economic Cooperation Framework Agreement (ECFA). The Chinese government supports relevant authorities to take appropriate measures based on the results of the trade barrier investigation.

Insight of the week:

Foreign investment in China continued its downward trend in the Q2 of 2023, reaching the lowest level in the last 25 years. In addition to concerns about the U.S.-China technology standoff, doubts about China’s willingness to continue opening up are also hindering cash flows into the country. According to data released this month by the State Administration of Foreign Exchange of China, direct investment by foreign companies in China during the second quarter amounted to $4.9 billion. This marked an 87% decrease compared to the previous year, representing the most significant decline since 1998, when comparable data was first made available.

As a response, China’s State Council issued 24-point guidelines on August 13 to further optimize the country’s foreign investment environment to further attract foreign investors. According to the guidelines, authorities should enhance the protection of the rights and interests of foreign investors, including strengthening the enforcement of intellectual property rights. The guidelines also aim to increase fiscal support and tax incentives for foreign-invested enterprises, such as temporarily exempting withholding income tax for foreign investors’ reinvestment of their profits into China. The State Council said it would explore a “convenient and secure management mechanism” for cross-border data flows. The proposal comes amid tensions between authorities and international enterprises, including global accounting firms, over data security.