FDI China ppt

Source: Ministry of Commerce of P.R.C.
3.Cross-border M&A in China ,2004-2006
(Billions of dollars)
10 8 6 4 2 0
2004 2005 2006
8.25 6.77 6.72
ቤተ መጻሕፍቲ ባይዱSource: UNCTAD, World Investment Report 2007
(Billion of dollars)
2.221 2.464 2.99 2.154 1.599 1.434 1.046 Hong Kong Virgin Island 22.432 South Korea Japan Singapore the US 3.229 Cayman Islands West Samoa Taiwan Province 14.166 Mauritius
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FDI & China
To Benefit from the Booming Economy of China
Speaker: Mr. Shen,Linchang
Attorney at Law of Shanghai Promise Law Office Founder of China Foreign Direct Investment Forum (CnFDI) . * Transnational Investment Consulting
3.To Control Cross-border M&A in China
• Just as mentioned above, cross-border M&A in China spurred great controversy. Although M&A accounted for a small share of the whole inward FDI to China, the M&A targets were usually the reputable and top Chinese companies in the relevant industries, foreign investors can shape monopoly position in Chinese markets by cross-border M&A. Furthermore, some Chinese traditional famous brands disappeared after M&A.Many people worry about the national economic security and strongly suggest effectively control cross-border M&A of Chinese companies. Consequently, in 2006,six ministries of central government jointly enacted a special regulation to control cross-border M&A in China. According to the regulation, all cross-border M&A of Chinese enterprises are subject to the examination of the Ministry of Commerce.
• Why does China alter the policy governing the FDI? • In the past three decades , China has witnessed rapid economic growth, however, such growth was on the cost of natural resources and environment pollution, Chinese government realizes such an economic growth model can not last long. • Additionally, after 30 years of economic development, especially due to the consecutive trade surplus, China has accumulated astronomical foreign reserves. Unlike 30 years ago, the lack of capital is no longer a problem for the development of Chinese economy.
1. Emphasis on Quality rather than Quantity
• Recently, Chinese government is increasingly emphasizing the quality rather than the quantity of inward FDI. China encourages FDI with advanced technology or managerial expertise. At the same time, China increasingly restricts the FDI with high energyconsumption and environment-pollution.
1. Globalization • First of all, globalization is an irresistible trend in 21st century, no one can change the trend of it. No country can isolate itself from the world. Every nation can only adapt to the tendency. Globalization will involve all economies and integrate them into a single global economy. Transnational companies in developed countries will continue to invest abroad. What is more, developing countries will become more and more important sources of FDI .
B. Policy Developments
• Definitely, governments’ policy towards FDI plays an important role in attracting FDI. Now let’s discuss the policy governing FDI in China. In 1950s and 1960s, due to the well known political reasons, China was isolated from western countries, logically, China shut up the door to western investors. Since 1978 , China has adopted reform and opening up policy. To develop China’s economy, Chinese government encourages FDI. In 1979, China promulgated Sino-China Equity Joint Venture Law; in 1986, China promulgated Foreign Capital Venture Law. In order to attract foreign investment, China gave foreign investors a variety of favorable treatments, such as tax reduction, cheaper land etc. In addition, nearly all local governments set up investment promotion agencies. To compete for foreign investment, many local governments even gave more favorable treatment to foreign investors some of which were illegal. Furthermore, After China joined the WTO in 2001, China reduced or abolished some performance requirements and other restrictions on FDI .
2. Unification of Two Income Tax Systems
• In 2007, China promulgated new corporate income tax law and unified two income tax systems for foreign affiliates and domestic enterprises. The new corporate income tax law took effect in January 1st, 2008.