Foreign Investment: China Releases Draft Measures On Approval of Direct, Overseas Projects


Source: BNA Snapshot
Related Topics: International Trade

BNA Snapshot
China's Management Measures for the Approval of Foreign Direct Investment
Key Development: National level reporting threshold for foreign direct investment projects raised from $100 million to $300 million for approved and encouraged investments.

Potential Impact: Reporting levels raised, but projects could possibly have to go through public comment process before they are approved to determine their “public benefit.” Energy savings analysis, land use proposals also must be submitted.

What's Next: Public comment period ends Sept. 15.

By Michael Standaert
SHENZHEN, China—China's National Development and Reform Commission issued two draft measures for public comment Aug. 16 on approving domestic foreign direct investment and overseas investment as it tries to attract foreign investment for projects with a “public benefit” as well as encourage more Chinese companies to invest outside of the country.

The new draft Management Measures for the Approval of Foreign Direct Investment replaces a similar measure implemented in 2004 and raises the threshold level for companies having to report investments to the national level.

Foreign investments for “encouraged and approved industries” of more than $300 million will now have to be reported to the NDRC, replacing the old threshold level of $100 million for reporting to the national level, according to the draft document. All other projects can be reported to the local and provincial level development and reform commissions.

For foreign direct investment in “restricted” industries, such as industries with high levels of energy consumption, the level at which approval would be needed by the NDRC remains the same, with any investment over $50 million having to be reported to the national level.

Energy Saving Analysis Required
Foreign companies investing in projects in China will also have to submit an energy savings analysis report as well as proposals about land acquisitions and relocation of residents, on top of the documentation that was stipulated in the previous regulation.

In addition, the new NDRC regulation states that it reserves the right to put project proposals up for public comment before they are approved if there is a question related to their public benefit.

For the approval measures on Chinese investment abroad in infrastructure or resource projects, any investment of more than $300 million will have to be approved by the NDRC.

Previously, investments of between $30 million and $200 million had to be approved by the NDRC and any outward investments over that would have to go through an approval process with the State Council.

The draft policies are available for public comment until Sept. 15.

For More Information
The two measures can be accessed in links to pdf documents (in Chinese) at the bottom of the public comment period announcement at the NDRC website:

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