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Competitive government incentives

govt.chinadaily.com.cn Updated: 2019-03-12

Industrial Policies

From 2015 to 2017, China had twice revised the Catalogue of the Guidance of Industries for Foreign Investment. The 2015 edition of the catalogue reduced the number of restrictive measures from 180 in the 2011 edition to 93. The 2017 edition further reduced the restrictive measures to 63 clauses, 65 percent less than the 2011 edition.

For the first time the 2017 edition included the negative list for foreign investment nationwide. Sectors not placed on the negative list will be subject to record management but their foreign capital inflow will not be restricted. In June 2019, China updated the 2019 negative list for foreign investment and the 2019 negative list for foreign investment in free trade zones, with the number of items cut down to 40 and 37 respectively.

In 1999, with the implementation of China's Western Development Strategy, to encourage domestic and foreign enterprises to invest in the region, relevant government departments promulgated the Catalogue of Advantaged Industries for Foreign Investment in the Central-Western Region. The newly amended Catalogue of Advantaged Industries for Foreign Investment in the Central-Western Region was promulgated in 2017. Foreign-invested projects falling within the Catalogue may enjoy the preferential policies for foreign-invested projects in an encouraged category.

Regional Policies

Since the reform and opening up, China has adopted a holistic strategy of proceeding in an orderly and step-by-step way from the coastal region to inland cities. Currently, the main economic areas are as follows:

1) National Pilot Free Trade Zones:

China (Shanghai) Pilot Free Trade Zone, China (Guangdong) Pilot Free Trade Zone, China (Tianjin) Pilot Free Trade Zone, China (Fujian) Pilot Free Trade Zone,

China (Zhejiang) Pilot Free Trade Zone, China (Henan) Pilot Free Trade Zone,

China (Sichuan) Pilot Free Trade Zone, China (Shaanxi) Pilot Free Trade Zone,

China (Hubei) Pilot Free Trade Zone, China (Chongqing) Pilot Free Trade Zone,

China (Liaoning) Pilot Free Trade Zone, China (Hainan) Pilot Free Trade Zone;

2) Special Economic Zones: Shenzhen, Zhuhai, Xiamen, Shantou, Hainan Island, Kashgarand Khorgos;

3) State-level New Areas (as of December 2018):

Shanghai Pudong New Area, Tianjin Binhai New Area, Chongqing Liangjiang New Area, ZhouShan Islands New Area, Gansu Lanzhou New Area, Guangdong Nansha New Area, Shaanxi Xixian New Area, Guizhou Gui’an New Area, Qingdao West Coast New Area, Liaoning Jinpu New Area, Sichuan Tianfu New Area, Hunan Xiangjiang New Area, Jiangsu Jiangbei New Area, Fujian Fuzhou New Area, Yunnan Dianzhong New Area, Heilongjiang Harbin New Area, Jinlin Changchun New Area, Jiangxi Ganjiang New Area, and Hebei Xiong’an New Area.

4) As of 2018, there were a total of 219 state-level economic and technological development zones, 19 border or cross-border economic cooperation zones and 168 national high-tech industrial development zones located in the provinces, municipalities and autonomous regions;

5) The western development policies:in accordance with the strategy of developing China's western region, investment including foreign funding in the central and western region of inland China is encouraged.

Tax Policies

Taxes applied to foreign-invested enterprises, foreign enterprises and foreign individuals (including compatriots from Hong Kong, Macao and Taiwan) in China include: corporate income tax, individual income tax, turnover taxes (including value-added tax and consumption tax), land value-added tax, stamp duty, vehicle and vessel usage license plate tax, and urban real estate tax. Import and export goods must pay tariff and import value-added tax in accordance with provisions of the Customs tariff regulations.

Since January 2008, the Chinese government has been implementing the new Enterprise Income Tax Law, unifying preferential tax policies and adopting a new tax preference regime in which industrial preference is the main emphasis and regional preference is supplementary.

For enterprises engaged in such industries as high and new technology, infrastructure, agriculture, forestry, animal husbandry and fishery, environmental protection, and safety production, preferential tax policies are provided (click HERE for more details).

Foreign-invested enterprises can also enjoy regional preferential tax policies. In addition to the policies stated above, the enterprises can settle in the areas with additional preferential tax policies, such as national pilot free trade zones or economic and technological development zones, as a (new) company or a branch. For more details, please refer to the official website of the development areas.

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China will further push forward the opening-up of its market as well as seek high quality development. China will build a world-class business environment in accordance with international trade rules, promoting the stable growth of foreign investment.

Further Improvements

There will be further improvements in the following four aspects:

First, China will relax control over market access. It will further revise the Negative List for Foreign Investment Access. The negative list of foreign investment piloted in free trade zones will be applied nationwide, the opening-up level of the service industry will be substantially improved, and the general manufacturing industry will be fully opened up. In some sectors, the restriction on foreign equity limits and business scope will be relaxed or canceled.

Second, China will greatly promote investment convenience and further simplify the procedures for the establishment of foreign-funded enterprises, promoting one-stop processing of business registration and commercial record registration. China will simplify related administrative examinations and approvals of enterprise’s production and operation as well as reduce the time of land approval and clearance of imports and exports.

Third, China will strengthen the opening up of the western, inland and coastal areas, and provide financial and land preferential support to foreign-invested enterprises that move their business to central, western regions or northeastern regions. China will continue to allow local governments to formulate preferential policies within their authorities to attract foreign investment.

Fourth, China will promote fair competition between foreign enterprises and domestic enterprises. It will treat both sides equally in "Made in China 2025" policies and technological projects. China will strictly protect intellectual property rights of foreign-funded enterprises and safeguard their legal rights and interests in accordance with the Foreign Investment Law.