Liberalizing rules for foreign equity in key business sectors a priority, China's economic regulator says

China plans to open the domestic market wider to foreign investment in several key sectors, with the manufacture of new-energy vehicles and a more robust financial sector among the priorities for liberalization in coming months, a spokeswoman for the nation's economic regulator said on Sept 14.

Meng Wei of the National Development and Reform Commission said China will open the world's second-largest economy wider to foreign investors, stepping up efforts to attract more foreign money.

She said the government will stick to its pledges to create a more fair and open business environment and will make use of the experience gained in free trade zones in other parts of China.

Her comments came after the State Council removed 27 restrictions in June from its negative list for foreign investment in free trade zones. A negative list outlines areas where investment is prohibited; all other areas are presumed to be open.

Foreign investors benefit from more flexible regulations and more market access in free trade zones.

Enterprises in sectors that can help the nation advance through industrial upgrades are expected to take the lead in future preferential policies, according to experts.

As China puts high emphasis on sustainable development, the trend for the future is away from reliance on old smokestack industries and toward more market access to foreign companies in such sectors as new energy vehicles, according to John Zeng, managing director of LMC Automotive Shanghai.

Zeng cites the example of a joint venture approved by the government between Germany's Volkswagen and China's JAC Motors in May.

The two are working to produce electric cars under a new brand. Zeng says he expects to see similar joint ventures, which create a competitive environment and boost the industry as a whole.

Opening up the financial sector might take longer, according to Zhao Qingming, chief economist at the research institute of the China Financial Futures Exchange.

He says the government may remove the current 49 percent foreign cap on securities companies, but it is not likely in the short run because much needs to be done to strengthen financial supervision to deal with possible external risks.

China has opened the door in areas such as credit rating services and has eased restrictions on allowing foreign banks to underwrite government bonds.

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(China Daily European Weekly 09/22/2017 page29)