New industry catalog to promote foreign investment

China’s revised industry catalog of sectors encouraging foreign investment will be effective on Jan 1, 2023. It will help expand high-level opening-up, further stabilize foreign investment and optimize its layout.

Foreign-invested projects under construction that comply with the new catalog will be applied to related favorable policies.

The catalog has 1,474 items, among which 239 are new and 167 are modified from the previous catalog of 2020.

Some major new points from the 2022 catalog: First, it calls for continuous efforts to encourage foreign investment in the manufacturing sector.

Second, it calls for continuous efforts to encourage foreign investment in producer services.

Third, it calls for continuous efforts to optimize the foreign investment layout.

Here are the main supportive policies. First, customs duties will be exempt for in-house equipment imported within total investment, except for those listed in the Catalog of Imported Major Technical Equipment and Products Not Exempt from Taxes and the Catalog of Non-exempted Imported Commodities of Foreign Investment Projects.

Second, enterprise income tax will be levied at a reduced rate of 15% for qualified enterprises in western regions and Hainan province.

Third, for foreign-invested industrial projects with intensive land use, the land transfer floor price can be determined by 70% of the lowest price standard of industrial land.

The Chinese market remains attractive to foreign investment. In the first 11 months of 2022, the actual use of foreign direct investment (FDI) in China expanded 9.9% year-on-year to nearly 1.16 trillion yuan.