Country to take steps to firm up long-term business confidence

China will strengthen services and assist overcome operational difficulties for global companies in order to firm up long-term business confidence of foreign investors amid the economic fallout of the COVID-19 pandemic, government officials said on Thursday.

The country saw foreign direct investment in the non-financial sector grow 0.5 percent year on year to 535.65 billion yuan (U.S.$77.16 billion) in the first seven months of this year, achieving positive growth for the first time since January, according to data from the Ministry of Commerce.

In July, FDI inflows expanded 15.8 percent year on year to 63.47 billion yuan, achieving positive growth for four consecutive months since April.

The government will also step up credit support for foreign trade companies, especially micro, small and medium-sized ones, and extend financial support to major foreign-funded enterprises, which are eligible for low-cost re-lending and rediscount quotas, said Ren Hongbin, assistant minister of commerce.

Ren's remarks came after the State Council had released a guideline on Wednesday to roll out more measures so as to protect foreign trade entities, support the local growth of global companies and stabilize supply chains.

Under the new government rules, the assistant minister said, foreign-funded companies are as entitled as domestic firms to the 1.5 trillion yuan re-lending and rediscount special quota support provided by the People's Bank of China, the country's central bank.

Moreover, the Export-Import Bank of China's 570 billion yuan in new loans can also be used to support qualified key foreign-funded companies.

More efforts will be made to help foreign trade firms expand market channels, as well as to improve trade facilities and services, including cross-border e-commerce platforms, cross-border logistics and overseas warehouses, Ren said.

He said China will better protect intellectual property rights and the legitimate rights and interests of overseas businesses, as well as make sure that they are willing to invest and develop in China.

The outbreak of the pandemic has prompted many countries to strengthen their already tightened scrutiny over foreign investment.

While some of the policy adjustments directly related to the pandemic control may ultimately prove to be temporary, the overall picture is likely to be one of structural change, rather than cyclical, with the pandemic accelerating already existing trends, said Nanda Lau, head of the Shanghai office of international law firm Herbert Smith Freehills.

In contrast, China is among only a few countries which have progressively opened parts of their economies to FDI and have streamlined their screening processes, said Lau, adding that this is well illustrated by the new Foreign Investment Law and the new negative list implemented in the first half of the year.

To facilitate trade flows and personnel travel, China will operate more flights with its major source countries of investment while increasing the total number of international passenger flights in a phased manner on conditions that COVID-19 risks are preventable and prevented, said Zong Changqing, director-general of the department of foreign investment administration at the Ministry of Commerce.

The government's new guideline has also urged more support for high-tech industries, stressing the need to encourage foreign investors to invest in the high-tech sector.

China is not only the largest manufacturing market and industrial market, but also  a market that carries out a lot of technological innovation. All these factors offer multinationals strong confidence to enrich their presence in China, said Peter Herweck, executive vice president of Schneider Electric SA, a French industrial conglomerate.

Even though the pandemic has added a number of uncertainties to the global economy this year, Schneider Electric's spending in research and development surged 15 percent year on year in China in the first seven months of 2020. The company is also eager to recruit more local talents.

Aided with morale-boosting momentum such as 5G, new infrastructure and next-generation factories, China's investment environment has become more attractive, Herweck said. The company has seen a large number of innovation results from its Chinese teams and partners, and the commercial environment in many sectors has notably improved in China, he added.

Xie Wen, director-general of the goods and services tax department under the State Taxation Administration, said the government will continue to implement preferential tax and fee policies for Chinese exporters as well as foreign companies to ease their operational pressure in the second half of the year.