In a concerted effort to enhance the investment environment and attract more foreign capital, the municipal governments of Beijing and Shanghai have introduced progressive measures to enable greater freedom in the movement of foreign investment in and out of China. Experts contend that these initiatives underscore China’s commitment to institutional openness.
Shanghai’s municipal government recently unveiled a set of 31 new measures, effective since September 1, within the China (Shanghai) Pilot Free Trade Zone. These measures allow foreign investors to conduct inward and outward remittances with unfettered flexibility, provided they adhere to established regulations. Lou Feipeng, a researcher at Postal Savings Bank of China, emphasized that these measures will safeguard the legitimate rights and interests of foreign investors in China. He considers them a significant step in China’s ongoing institutional opening to foreign investment, with the potential to enhance the overall business environment and attract further foreign capital.
Similarly, the Beijing municipal commerce bureau, in a draft version of the city’s foreign investment regulations, released plans to support the unhindered inward and outward remittances related to foreign investors’ actual and authorized capital transfers concerning investments. The regulations stipulate that these remittances should be processed promptly. The public can provide feedback on these regulations until October 19.
Cui Fan, an economics professor at the University of International Business and Economics in Beijing, explained that these measures align with the 33 measures introduced by the State Council in June, aiming to promote institutional openness across the designated free-trade zones and the free port. The regulations permit businesses to transfer their legitimate and authorized foreign investment-related transfers without constraints, encompassing capital contributions, profits, dividends, interest payments, capital gains, proceeds from investment sales, and contract payments, among others.
Initially, these measures will be implemented within the free-trade zones in Shanghai, Beijing, Tianjin, Guangdong, Fujian, and Hainan Free Trade Port. Cui pointed out that Beijing’s announcement of measures to expand a pilot program from its free-trade zone to encompass the entire capital illustrates Beijing’s commitment to high-level openness.
Facilitating seamless cross-border capital flows also holds significant importance for the internationalization of the renminbi, noted Cui. Wang Xin, the director of the research bureau at the People’s Bank of China, emphasized that companies and individuals in the designated locations will undergo initial trials, greatly enriching their investment avenues in accordance with the State Council’s policy.
This top-down approach is designed to prevent fragmented or scattered efforts in the opening-up process. It will contribute to China’s institutional openness, encompassing rules, regulations, management, and standards, and aligns with the country’s dual-circulation development strategy, Wang added.