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China Opens Manufacturing and Healthcare Sectors to Foreign Investment
Context:
China will fully open its manufacturing sector and expand foreign investment in healthcare to revive its economy.
Key Announcements:
Manufacturing Sector:
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- Effective November 1, China will remove all limits on foreign investments in manufacturing.
- Minor restrictions, such as requiring Chinese majority control in printing and prohibiting investments in Chinese herbal medicine production, will be lifted.
Healthcare Sector:
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- Foreign capital can engage in stem cell and gene therapy technologies in pilot free trade zones (Beijing, Shanghai, Guangdong, Hainan).
- Wholly foreign-owned hospitals can be established in major cities, but the acquisition of public hospitals and traditional Chinese medicine facilities remains prohibited.
Economic Context:
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Government Strategy:
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- Aimed at revitalising the economy amidst declining foreign investment and a sluggish recovery post-COVID.
- Vice-Premier emphasised the importance of foreign investment in China’s modernisation and international cooperation.
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Foreign Direct Investment (FDI):
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- FDI in China dropped nearly 30% year-on-year to 539.5 billion yuan (US$76.1 billion) from January to July 2023.
- China had approximately 1.18 million foreign-invested enterprises by the end of 2023, with total investments of 28.4 trillion yuan.
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Policy Changes:
Negative List Update:
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- The list of restricted sectors for foreign investment reduced from 31 to 29, easing access to cloud services and telecoms in key regions.
- This marks an effort to improve China’s business environment, responding to concerns from foreign chambers of commerce.
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Future Prospects:
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- The government aims to attract long-term foreign investments, highlighting the potential for growth in China’s market.
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