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China sets out measures to promote foreign investment growth


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China sets out measures to promote foreign investment growth

China set out draft amended administrative measures for foreign lenders and separately announced a temporary exemption for foreign firms from paying provisional income tax on profits re-invested in the country, Reuters reported.

The moves reflect the country's efforts to make its markets accessible to and attractive for foreign investors.

The China Banking Regulatory Commission said the amended guidelines will also lay out "a clear legal basis" for foreign banks to make equity investments in Chinese financial institutions, according to the report.

Meanwhile, draft procedures relating to the licensing and oversight of some foreign-funded bank activities, including securities fund custody business and wealth management services for foreign customers, were also issued.

The decline in foreign banks' market share in China to 1.2%, from 2.4% a decade ago, does not promote competition, CBRC Chairman Guo Shuqing said in October, adding that the country will further open up its banking system to foreign investors.

Meanwhile, the Chinese finance ministry said Dec. 28 that the temporary tax exemption will support the growth of foreign investment, improve the quality of foreign investment and encourage foreign investors to increase their investment in China, according to a separate report.

The exemption is applicable retroactively from Jan. 1 of the current year, but is contingent upon certain conditions, including directly investing in sectors encouraged by the government, the ministry reportedly added.

Some analysts see the Chinese tax exemption as a move to counter the impact of a U.S. tax cut, which could lead to a repatriation of earnings by U.S. firms.