China’s quest for overseas capital continues as investment restrictions eased in 6 cities

To bring in overseas investment, China has announced it is widening foreign access to services in a group of regional capital cities

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China has announced it will relax restrictions on foreign investment in several of its service industries, including entertainment. Photo: Xinhua

Published: 7:00pm, 12 Jul 2024

China’s State Council has relaxed restrictions on foreign participation in the service sector for six Chinese cities – including regional powerhouses Guangzhou and Hangzhou – in a pilot programme keeping with Beijing’s wider efforts to appeal to overseas capital, stimulate economic activity and boost growth.

A statement, issued on Thursday by the national cabinet, said the government will adjust certain rules related to the management and entry of foreign entities into designated non-profit organisations, travel agencies and entertainment. The other cities included in the plan – all capitals of their respective provinces – are Shenyang, Nanjing, Chengdu and Wuhan.

Beijing has ramped up its efforts to entice foreign investment in recent months, with local governments introducing a number of incentives to induce inflows from overseas. Official figures from the Ministry of Commerce show the country’s foreign direct investment dropped 28.2 per cent in the first five months of 2024 to US$57.94 billion.

“This is a welcome step in the right direction of opening up services to foreign investment, [but] they are piecemeal measures,” said Wang Zichen, a research fellow at the Beijing-based Centre for China and Globalisation think tank.

“China could use more ambition in this regard, as services have proved to be the biggest job creators compared to the much-vaunted manufacturing.”

The country’s gross domestic product data for the second quarter is expected to be released next Monday, coinciding with the start of the third plenum of the Communist Party’s Central Committee. The long-awaited conclave will reveal the priorities of China’s leadership, and their outlook on overall economic development for the coming years.