China will push forward unified laws and regulations on domestic and foreign investment in order to enhance fair and transparent market access, the Ministry of Commerce (MOFCOM) said on Tuesday.
"Market barriers still exist today, even though China's socialist market economy has been taking shape," Shen Danyang, MOFCOM spokesperson, said at a press conference in Beijing, citing examples of local malpractice such as barring non-local firms from tendering for local contracts.
Shen said the country will also ease restrictions on registered capital, caps on shareholdings and areas of business which foreign investors have access to, as well encourage multinational companies to establish regional headquarters and also research and development (R&D) facilities and finance management centers in China.
The MOFCOM is attempting to follow up on the economic reform package outlined at the Third Plenary Session of the 18th Communist Party of China Central Committee that ended on November 12.
The key point of the economic reforms is the reduction of government intervention and letting market forces play a decisive role.
China will gradually open the service sectors including financial services, education, entertainment, healthcare, logistics and e-commerce, and will loosen control on market access in general manufacturing such as steel, chemical and auto making, Shen said.
"Much of the reforms that we see in the Third Plenum decisions are in alignment with the recommendations that the Chamber made in our Position Paper issued a couple of months ago," Mats Harborn, vice president of the European Union Chamber of Commerce in China, told the Global Times.
"What we are seeing is a more regulated market in the sense that it could be a more level-playing field for all actors, regardless of company ownership or nationality, which would improve competition and lead to better efficiency," Harborn said, adding that this is what any investor is looking for.
Regarding the easing of restrictions on registered capital and the cap on share holdings, Harbon said, "This is what we believe is a market economy. We are very positive about the initiatives."
China attracted foreign direct investment of $97 billion during the January to October period, up 5.77 percent from a year earlier. EU investment in China increased 23 percent year-on-year, and China's non-financial outbound investment in the EU also increased 92.4 percent from a year earlier, MOFCOM data showed.
A bilateral investment agreement negotiation to be started between China and the EU will give a further boost to the two-way investment, according to Shen.
The reform road map will lure more foreign investment, said Ye Jun, a partner at Shanghai-based Roland Berger, a wholly foreign-owned strategy consulting firm, which plans to set up its Asia Pacific headquarters in Shanghai.
Those have not invested in China may quicken their steps to enter the Chinese market, and those already established in China are expected to expand, Ye told the Global Times on Tuesday.
China aims to move up the value chain from a low-end manufacturing hub, and encouraging the development of R&D centers and regional headquarters will help China achieve this goal, he noted.
"We are very encouraged by the announced reforms. We are optimistic about two areas in particular: Services and the investment environment," Gregory Gilligan, chairman of the American Chamber of Commerce in China said in a statement sent to the Global Times on Monday.
"In services, we have seen commitments to opening up several sectors that we believe will be crucial to China's future economic prosperity, including logistics and medicine. For the investment environment, China's leaders have also recognized the need to cut red tape and allow enterprises to flourish," Gilligan was quoted as saying in the statement.
Foreign investment in China's service sector reached $49.8 billion during the January to October period, up 13.93 percent year-on-year, while agricultural and manufacturing sectors both had a fall in FDI growth from a year earlier. The service sector currently accounts for 51.34 percent of the total FDI in China.
Currently, some restrictions remain in sectors like finance and transportation, which often require high registered capital, and also caps the equity holdings of foreign investors to below 50 percent for joint venture companies.