China to relax investment rules amid slowdown | Business| Economy and finance news from a German perspective | DW | 22.09.2015
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China to relax investment rules amid slowdown

Chinese leaders have agreed to soften rules for foreign investment, shortening a 'negative list' of protected industries and expanding the rules beyond special free trade zones to the whole country.

Chinese state media reported Tuesday that rules governing foreign investment in the world's second largest economy had been changed and were to be rolled out nationwide.

Official news agency Xinhua said the revision was intended to open the market by allowing investment into any sector except those on a so-called "negative list" of protected industries.

The changes would be expanded to some regions between 2015 and 2017, and were going to be valid nationwide in 2018, Xinhua added.

Currently, only sectors explicitly listed in an investment catalogue are open to foreign involvement in China. Details of the new list were not provided by Chinese authorities. But a trial list adopted in the Shanghai free trade zone in 2014 was criticized by investors because it obstructed investment in financial services, agricultural processing and key manufacturing industries such as automobiles.

The EU Chamber of Commerce greeted the latest decision. Chamber president Jörg Wuttke told the German news agency dpa that the organization had long pressed China for a removal of the investment catalogue "in favor of a short negative list with nationwide effect."

In a statement, the US-China Business Council, however, described the move as only "an incremental step forward in China's broad economic reforms, but of little practical use to foreign companies."

China stems downturn

Tuesday's announcement followed Prime Minister Li Keqiang's promise to relax restrictions on foreign capital in financial markets, made during a meeting of the World Economic Forum in Dalian two weeks ago.

Admitting that the Chinese economy had come "under downward pressure," he said China had the means to prevent a "hard landing."

Analysts, however, believe that China is struggling to meet its growth target for 2015 of about 7 per cent - a figure that is itself a marked slowdown from growth levels of recent years. The country's gross domestic product (GDP) grew only about 7 percent in the first two quarters of this year amid sluggish investment and falling exports.

In its annual growth outlook released Tuesday, the Asian Development Bank (ADB) even predicted the slowest Chinese growth rate since 1990, saying the 2015 expansion rate would come in at no more than 6.8 percent. But talk of a collapse in Chinese growth were "overblown," ADB chief economist Shang-Jin Wei told journalists in Hong Kong.

uhe/pad (AFP, dpa)

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