Chinese Liang Hui 2018: What are the opportunities for foreign enterprises?

by | April 20, 2018

Chinese Liang Hui 2018: What are the opportunities for foreign enterprises?

by | April 20, 2018

Liang Hui (两会) is the Chinese name for the most important Chinese national conferences. It translates into “Two Sessions” in English. This year the 13th Chinese Two Sessions have been successfully held in Beijing from March 6th till March 20th in 2018.

First of all, what is Liang Hui?

Liang Hui (两会) is the joined term for the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC), which are held at the same time during the year. Every five years, people’s representatives from all over China will attend the Liang Hui in Beijing. They will bring suggestions, proposals, people’s comments and feedback to the central government. All the information will be summarized and taken into consideration in order to develop a national plan and strategy. Moreover, new policies and regulations or changes to existing ones will be proposed and determined. Consequently, the Liang Hui are the key indicator of China’s future development route.

This year, among all the topics at the Liang Hui, it shows that China is going to provide opportunities and positive trends for foreign enterprises and businesses for the next five years. China’s rapid growth has provided good opportunities for foreign entities. Last year, China’s Foreign Direct Investment reached US$ 131 billion, ranking China second in the world. Foreign investments account for about 50% of total imports and exports value, for nearly 25% of industrial output value, for about 20% of tax income, and they contribute to more than 10% of employment. Therefore, in order to keep the role of foreign investments, more optimistic actions, rules and regulations are going to take place.

Further Opening-up the Economy

“China will open even wider to the rest of the world,” Premier Li Keqiang said at a press conference after the conclusion of the Liang Hui, “The Chinese economy is so integrated into the global economy that closing the doors would only block China’s own way.”

China still has a lot of potential and space for further opening up its market. Domestic industries such as services and manufacturing, will open even wider to foreign investors. With the aim of making the Chinese market a fair place for both domestic and overseas firms, China will lower overall tariffs to increase imports, and gradually relax and even scrap foreign-owned equity limits in some sectors. Furthermore, the negative list for foreign investment, which lists for which industries foreign investment is restricted or limited, will be shortened.

Inland Free Trade Zones and Free Trade Ports

In 2013, the first Free Trade Zone (FTZ) was established in Shanghai. Since then, China has gradually established 11 FTZs. Do you want to know what Free Trade Zones are in China? Please click here, to find our article on this topic.

China is planning to build both coastal and inland free trade zones and ports. The establishment of the inland FTZs will boost the demands on diversified service functions. Furthermore, they will create new logistic hubs for air and freight transportation services in China’s central and western regions. These plans together with the shortened negative list in FTZs, which was formalized in January 2018, is going to increase the opportunities for more foreign enterprises and encourage them to enter the Chinese market. The building of Free Trade Ports (FTP) is still in an exploration stage. The central government will grant more power to FTZs and explore the opening of FTPs.

One Belt one Road Initiative (OBOR)

In the Report of the Work of Government, which was published during the Liang Hui, Premier Li has mentioned “One Belt One Road Initiative” several times. OBOR will promote the construction of an major international channel, it will deepen the cooperation in customs clearance along the route and it will increase international collaboration on production capacity. Furthermore, it will increase the opening of the western, inland and border areas and will create new space for economic cooperation.

This year, the One Belt One Road Initiative will be further implemented and expanded on. For the majority of foreign companies in China, it will undoubtedly be a huge advantage. It means a better market environment and excellent opportunities.

Another project that China will implement, is that the country is going to hold the China International Import EXPO (CIIE) starting from 2018. The Chinese Government wants to build the Expo into a world-class one. It is not only an open international cooperation platform for presenting national development achievements, but also a stage for discussing about major issues of foreign trade and world economy. The Expo consist two parts: (1) Country pavilion for trade and investment and (2) Enterprise and business exhibition in goods and services. “I am sure this new platform of mutually beneficial cooperation will help all parties to better share the opportunities of China’s development”, said by President Xi.

As we can see, China is dedicated to improving its market environment to attract foreign companies. The new policies and regulations proposed during the Liang Hui will generate more chances and positive feedback. 1421 Consulting Group is willing to facilitate more and more companies to benefit from China’s development. Please feel free to contact us, we are more than happy to share our knowledge and insights with you.

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What happened in the year 1421?

From 1421 to 1423, during the Ming Dynasty of China under Emperor Zhu Di (朱棣) the fleets of Admiral Zheng He (鄭和), commanded by the Chinese captains, discovered Australia, New Zealand, the Americas, Antarctica, the Northeast Passage; and circumnavigated Greenland.

Due to this endeavour we can conclude that “1421 is the year that the Chinese discover the world”.