China issues guidelines to attract foreign investment as its economy struggles

China’s State Council Sunday issued guidelines to further optimize the foreign investment environment and attract more foreign investment, including tax and visa measures, as it seeks to bolster the flagging economy. 

According to the statement posted on the central government’s website Beijing aims to attract more investment in key industries and encourage foreign companies to set up research and development centers in the nation, reported Bloomberg. 

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

The guidelines also announced 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, reported Reuters. 

It will help accelerate work on foreign projects in the biopharmaceutical industry and steadily increase trial areas for certain telecommunication services, according to the statement. Qualified foreign companies will be encouraged to set up investment units and regional headquarters, it said. 

China will also make applying for visas and residence permits more convenient for employees of foreign companies, while increasing fiscal and taxation support for the businesses, according to the State Council statement.

The State Council guidelines 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 wants to attract foreign capital as its economic recovery from the COVID pandemic has slow down due to weak export demand from key trade partners and ongoing turmoil in its 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, the Reuters report said.
 

(With inputes from agencies)