China State Council issues guidelines in bid to increase foreign investment

BEIJING  –China‘s State Council issued guidelines on Sunday that it said would further optimize the country’s foreign investment environment and attract more foreign investment.

The State Council said in a document containing 24 guidelines that authorities should increase protection of the rights and interests of foreign investors, including strengthening enforcement of intellectual property rights.

The document also announced guidelines 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.

China has sought to court foreign capital as its economic recovery from the COVID pandemic slows in the face of weak export demand from key trade partners and ongoing tumult in the country’s property market.

However, Beijing has so far struggled to attract foreign enterprises and investors, which are wary of political risk in an environment that increasingly prioritises national security measures, and concerned about the impact of deteriorating relations between China and many Western countries on their operations.