China’s Ministry of Commerce takes a closer look at foreign investment

Chinese Ministry of Commerce spokesman Gao Feng addressed reporters at a regular press conference on April 29, 2021 in Beijing, China.

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BEIJING – China’s Ministry of Commerce plans to take a closer look at foreign investment on the basis of national security.

The ministry’s priorities for the next five years – released this week – include a reference to “Foreign Investment Security Review Measures” which came into effect in January. These measures usually require a prior review of foreign investment plans related to the Chinese military and important agricultural, energy and technological products.

While the brief mention of the review system – on page 43 of the 46-page document – does not necessarily represent further action by the Chinese authorities, the reference indicates that foreign investments in China may be subject to review. more in-depth.

In recent years, the United States has increased its oversight of Chinese investments in the country, although American companies have faced many more restrictions on where they can invest in China.

In a section on preventing foreign investment risks, the Commerce Ministry said it would “improve the national security review system for foreign investments and initiate security investigations into foreign investments that affect or could affect national security “. This is according to a CNBC translation of the Chinese text.

However, the ministry also said it would expand the areas in which foreign capital could invest, including strategic areas such as telecommunications, internet, education and health care. The ministry said it would further relax the ability of foreigners to make strategic investments in publicly traded companies.

The document follows the publication of the central government’s 14th five-year plan in March. Beijing publishes these economic development priorities every five years, and government departments and local authorities thereafter publish details of how they plan to implement the national goals.

The Commerce Department’s plan underscored the need to respond to the impact of trade tensions with the United States, while strengthening collaboration with U.S. states and local governments.

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The ministry predicts an average annual growth of 5% in retail sales through 2025, with the portion sold online growing at a slightly faster pace of 7.6%. Imports and exports of goods are likely to grow by an average of 2% per year until 2025, according to the plan.

Overall, the ministry outlined how it would work to develop China’s domestic market, in accordance with Beijing’s “dual traffic” plan.

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