What is China doing to Encourage Foreign Investment in 2023?

Starting from 1 January 2023, an updated Catalogue of Industries to Encourage Foreign Investment (2022 Edition), issued by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MofCom), will come into effect – so who are the main beneficiaries?

The catalogue identifies industries where foreign direct investment (FDI) will be welcome and treated with favourable policies. Investments in encouraged industries can usually enjoy benefits such as exemption from import duty for the import of equipment to be used by the investing company, or priority land-use rights for certain industrial projects.

The catalogue now lists a total of 1,474 items, a net increase of 239 over the 2020 edition of the catalogue. Further modifications were made to 167 items that were already included. The main changes are as follows:

1. The catalogue continues to focus on manufacturing – notably, manufacturing in IT, advanced machinery, energy conservation, environmental protection and modern transportation – as a key industry through which to encourage foreign investment and upgrade the industrial and supply chain. Many items related to components, spare parts, and equipment manufacturing have been added to the list or expanded.
2. The catalogue continues to guide foreign investment in production-oriented services. It will focus on promoting the integrated development of the service and manufacturing industries and many items in the realms of professional design, technical services, and development have been added to the list.
3. The catalogue continues to optimise the regional allocation of foreign investment and expands the list of incentives in the central and western regions of China* in light of their comparative advantages in terms of labour force and distinctive resources. Foreign investments in western China and Hainan Province may also be able to access a reduction in corporate income tax of up to 15%.

Following the release of the catalogue, some of the industries that boast improved investment opportunities include healthcare (both medical devices and pharmaceuticals), sports (notably winter sports), green and low carbon technologies and vocational education (although not language and arts training schools for primary and secondary school children).

Click here to read the original notice from Mofcom.

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* According to the NDRC, central and western regions include Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shanxi, Gansu, Qinghai, Ningxia, Xinjiang , Inner Mongolia and Guangxi Province.