The path for foreign direct investment (FDI) in China has been the same for many years. Potential investors must file an application and wait for government administrative approval before being able to invest. The process is known to be somewhat cumbersome, filing these applications can take time, hindering or even halting certain investors from considering investing in China.
In 2016, this is changing. Now, investors need only to submit registration materials, a big change that is cutting the processing time by 95%. What has changed though? Investors now need only to submit their registration material by email, and wait for confirmation, which takes up to three days. Premier Li Keqiang spoke to reporters in China earlier this year confirming a new application process for FDI.
The way this new system works is through China’s new compiled information on negative investors. Starting in October 2013, the Shanghai pilot free trade zone had begun collecting data on investors in China and recording their actions. With this compiled list completed, new investment applications will simply be screened against this list of bad investors.
This is a great new opportunity for investors as well as China to bounce back after a rough year in 2015. There has been much anticipation of a wider opening of the Chinese market, investors are still keen to be a part of the bonus of the country’s growth.
An interesting report conducted by the US-China Business Council has found that 90 percent of US businesses operating in China were profitable in 2015, in contrast to 85% in 2014; and this is amidst the slump China found itself in earlier this year. It seems like China does well to its investors, even during a period of economic downturn. It seems that the growth in China seems to always pay off.
From January-September, the first eight months of 2016, Foreign Direct Investment in China increased by 4.5 percent. Total foreign investment numbers in China, as released by China’s Ministry of Commerce, is currently at $85.9 billion. With this, a combined 18,538 new foreign-funded businesses were established within the same 8 month timeline.
Because of the economic slowdown in 2015, China’s economy grew 6.7% during the second quarter of this year, the lowest growth rate the country has seen since the 2009 financial crisis.
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