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Redefining FDI

Last year there was a lot of debate within China about the role of foreign investors in China [1](there were even suggestions that some foreign investors were “malicious” and were a danger to China’s long-term development).

Now, after tax incentives for foreign investors have already been addressed [2], and as protectionist tendencies [3]have been seen lurking, AFP reports that:

Sectors that will be restricted (Xinhua reports that the rules go into force on December 1st) are said to include:

It is clear that China’s direction is towards quality over quantity of FDI, and that key “strategic” sectors (whatever they may be) will remain under state control. These moves have been in the pipeline for some time, and are influenced by a variety of domestic and international political and economic factors (including growing economic nationalism in China, as well as protectionism and trade deficit worries abroad). It will be interesting to see what reaction there is to these moves – and how far and how fast (and how evenly across the country) they are implemented in practice.

In the meantime, a lot of new corporate policy and risk analysis reports can be expected!

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