China to Support Foreigners’ Public Offering

The Chinese government has taken measures to attract foreign investments by encouraging the foreign companies to issue stocks in china.

On April 13 the Chinese government published the “Several Opinions of the State Council on Further Utilizing Foreign Capital” (hereafter the Opinions) on its official website. It is said in the Opinions that China presently still owns obvious advantages in using foreign investments. The Chinese government encourages the foreign companies to take part in the reorganizations, restructurings as well as mergers of the domestic enterprises in China through buying shares and acquisitions. Meanwhile, the government will encourage the qualified foreign company to issue stocks, corporate bonds and medium-term notes to expand their financing channels. The financial institutions are asked to give bigger credit support to the foreign-funded companies. In addition, more foreign investment bodies will be allowed to issue the RMB bonds in China.

There are 20 measures in total in the Opinions, involving “optimizing the structure of using foreign investment”, “guiding the foreign investors to put more money in the Central and West China”, “deepening the reform to foreign investment management system” and “creating friendly investment environment”.

Firstly, it is pointed out in the Opinions that China will modify the “Catalogue for the Guidance of Foreign Investment Industries” based on the economic development demand, to open more industries to the foreigners and to encourage the foreigners to invest in the high-end manufacturing, hi-tech technology, modern services, new energy and environment-friendly industries. Moreover, the foreign investors will be gradually banned to invest into the industries with serious pollution, large energy and resource consumption, as well as already excessive production capacity.

Secondly, the companies listed in the A-share market (yuan-denominated market) are encouraged to bring in the strategic foreign partners. The Opinions also listed the stipulations about the foreign investors’ taking part in the securities investment in China and the corporation acquisitions. Meanwhile, the anti-monopoly system which has been built up will be consummated in the future, in order to prevent the monopolization happening to any industries. More efforts will be put into the security review system of foreign acquisitions in China.

Thirdly, the Opinions reiterated the requirements of making best use of overseas capital market. More efforts will be given to the qualified domestic enterprises in China to go public in the overseas stock market based on the national development strategies as well as their own development plans. The government hopes that these enterprises can make use of the domestic and overseas markets to improve the competitive power and expand their brand awareness. The pilot programs of using the foreign investment to set up guarantee companies for small- and medium-sized enterprises will be continued. The foreign investors are also encouraged to set up the venture firms in China.

Fourthly, the foreign investors are encouraged to invest in the Central and West China. The amended “Catalogue of Priority Industries for Foreign Investment in the Central and West China” will be published soon. In the new regulation the clauses about labor intensive projects are added, which encourage the foreign investors to set up the labor intensive enterprises meeting the requirements of environment protection in Central and West China.

Fifthly, the qualified foreign companies which invest in Central and West China will enjoy the favorable conditions in tax, making these areas still attractive to the foreign investors. Some foreign investments in East China will be moved into Central and West China. During the process the different local governments will give support to the foreign companies in policies, capital and technology, simplifying the process and providing convenience for the investors. Meanwhile, the government will also encourage the foreign banks to establish branches and start business in Central and West China.

In order to deepen the foreign investment management system, it is required in the Opinions that all the examinations of the foreign invested projects should be done in a while. In the future, the examinations will cost less time since the method will be improved. All in all, China still commits itself to creating a friendly investment environment, making it more appealing for the foreign investors.