January 2021 / China
Six Authorities Optimize Cross-border RMB Policies
Six authorities including the People's Bank of China released on January 4, 2021 the Circular about Further Optimizing Cross-border RMB policies to Stabilize Foreign Trade and Foreign Investment. The circular will be implemented from February 4, 2021.
The circular covers policies in five aspects: simplifying cross-border RMB settlement process, optimizing management of cross-border RMB investment and financing, facilitating cross-border RMB receipt and payment under personal current accounts, and expediting the use of RMB settlement accounts by overseas institutions. The circular stated that foreign institutions can receive RMB funds remitted from their overseas accounts under the same name.
PBOC Scraps Special RMB Deposit Account for Foreign Direct Investment in Lingang New Area of Shanghai Free Trade Zone
Shanghai Head Office of the People's Bank of China released on January 6, 2021 the Circular about Scrapping Special RMB Deposit Account for Foreign Direct Investment at the Lingang New Area of Shanghai Free Trade Zone.
According to the circular, foreign-funded enterprises registered in the Lingang New Area no longer have to open special RMB capital accounts when they make capital contributions in the Chinese currency. Their settlement bank can directly handle RMB capital account services for enterprises, and the use of funds must comply with relevant documents of the People's Bank of China. After the RMB capital account is canceled, the settlement bank will continue to submit information to the RMB cross-border payment and receipt management information system (RCPMIS).
PBOC and SAFE Lowers Macro-prudential Adjustment Parameters for Cross-Border Financing
The People's Bank of China and the State Administration of Foreign Exchange released on January 7, 2021 a Circular to lower the macro-prudential adjustment parameters for cross-border financing from 1.25 to 1, with immediate effect.
Enterprises whose risk-weighted balance of cross-border financing exceeds the new upper limit may hold the cross-border financing contract concluded earlier to its maturity. Other matters related to the macro-prudential management of cross-border financing are still subject to the Notice of the People's Bank of China on Matters Concerning the Macro-Prudent Management of Full-caliber Cross-border Financing.
China largest FDI recipient in 2020 amidst global plunge — UNCTAD report
Global foreign direct investment (FDI) plunged by 42 percent in 2020, a new report by the United Nations Conference on Trade and Development (UNCTAD) showed on Sunday, while China bucked the trend becoming the world's top recipient of investment flows.
In its latest Investment Trends Monitor, the Geneva-based UN trade and development body said that FDI fell sharply to an estimated 859 billion U.S. dollars last year, from 1.5 trillion U.S. dollars in 2019, and warned of further weakness this year, putting a sustainable recovery from the COVID-19 pandemic at risk.
"FDI finished 2020 more than 30 percent below the trough after the global financial crisis in 2009 and back at a level last seen in the 1990s," the report wrote.
The data showed that the decline was concentrated in developed countries, where FDI flows fell by 69 percent to an estimated 229 billion U.S. dollars, the lowest level in 25 years.
The decline in developing economies was relatively measured at 12 percent to an estimated 616 billion U.S. dollars, the report showed, while China topped the ranking of the largest FDI recipients.
FDI flows to China rose by 4 percent to 163 billion U.S. dollars, making the country the world's largest recipient in 2020, followed by the United States.
"A return to positive gross domestic product (GDP) growth and the government's targeted investment facilitation program helped stabilize investment after the early (coronavirus) lockdown," James Zhan, UNCTAD's director of investment and enterprise, said in a virtual press conference.
"The global dependence on the supply chains of multinational enterprises in China during the pandemic also sustained the FDI growth in China," he added.
China saw its GDP increase 2.3 percent year on year last year and is expected to be the only major economy to post growth in the pandemic-ravaged year, according to the National Bureau of Statistics (NBS).http://www.xinhuanet.com/english/2021-01/25/c_139694307.htm
China, EU conclude talks on investment deal
The investment treaty between China and the European Union is a comprehensive, balanced and advanced agreement that is based on high-level international economic and trade rules, and focuses on institutional openness, the Ministry of Commerce said late Wednesday.
The ministry made the remarks after China and the EU concluded the negotiations of the bilateral investment deal in principle, after more than seven years of talks. The progress was announced during the China-EU leaders' meeting via video conference on Wednesday.
The treaty covers areas far beyond traditional bilateral investment agreements, and the result of the negotiations covers four areas: market access commitments, fair competition rules, sustainable development and dispute settlement, said Li Yongjie, director-general of department of treaty and law at the commerce ministry.
The official said that the aspect of balance is mainly reflected in that both sides have come up with high-level and mutually beneficial market access commitments, and all rules apply in both directions.
Both sides have made open commitments while at the same time paying great attention to retaining the necessary regulatory powers. They have not only focused on promoting bilateral investment cooperation, but also emphasized that investment needs to be conducive to sustainable development, she said.
The high level standard of this treaty can also be reflected in the joint commitment of both parties to promote investment liberalization and facilitation, create a level playing field for companies, and reach high-level negotiation results in market access and fair competition rules, said Li, adding the pact will benefit Chinese and European companies, as well as global companies.http://www.chinadaily.com.cn/a/202012/30/WS5fec9ecea31024ad0ba9fa6e.html
Paid-in investment up 6.2% in 2020, hitting record high
In 2020, China made major achievements in responding to the severe impact of COVID-19 and accomplished the tasks in stabilizing foreign trade. As global cross-border direct investment plummeted, China's paid-in foreign direct investment (FDI) bucked the trend and registered increase in size, growth margin, and global share. Four characteristics can be summarized:
First, the size of FDI hit a record high. In 2020, paid-in FDI reached a record 999.98 billion yuan, up 6.2% year-on-year (US$144.37 billion, up 4.5% year-on-year in US dollar terms; excluding the banking, securities, and insurance sectors, unless otherwise indicated).
Second, the investment mix further improved. Paid-in investment in the services sector was 776.77 billion yuan, up 13.9% and accounting for 77.7% of the total amount. Paid-in investment in high-tech industries grew by 11.4%, where high-tech services saw a surge of 28.5%; specifically, paid-in investment in research and development services, science and technology application services, e-commerce services, and information services increased by 78.8%, 52.7%, 15.1%, and 11.6% respectively.
Third, main investment sources remained stable. The 15 largest sources of investment, accounting for 98% of China's total FDI, expanded their investment in China by 6.4%. Investment from the Netherlands and the UK rose by 47.6% and 30.7%. ASEAN's investment in China grew by a margin of 0.7%.
Fourth, regional champions played a significant role. FDI attracted by eastern China grew by 8.9%, coming to 88.4% of the national total. Specifically, Jiangsu, Guangdong, Shanghai, Shandong, and Zhejiang, which were major investment attractors, saw an increase of 5.1%, 6.5%, 6.6%, 20.3%, and 18.3% respectively. Northeast, central, and western China also made a huge leap, with investment in Liaoning, Hunan and Hebei jumping by 13.7%, 28.2%, and 35.5% respectively.http://english.mofcom.gov.cn/article/newsrelease/significantnews/202101/20210103033600.shtml