Australian experts have lauded the move by the Chinese government to begin the process of easing the laws for foreign investment into China, after a meeting of the Central Leading Group of Deepening Overall Reform took place on Tuesday.
Ministry of Commerce figures outline that during the first four months of the year, foreign capital utilized in China was 41.6 billion U.S. dollars, with that number constituting a tiny dip of 0.1 percent over the corresponding period.
The key party meeting presided over by Xi Jinping, general secretary of the CPC Central Committee, revised the Catalog for the Guidance of Foreign Investment Industries, in order to ensure that more opportunities were created for overseas investment to make its way into China.
This is a very positive move towards improving many vital sectors in China’s economy, according to James Laurenceson, deputy director of the Australia-China Relations Institute at the University of Technology Sydney, who said on Thursday that this move will grant access to huge swathes of the Chinese economy, previously inaccessible to foreigners.
“Greatly reducing the number of sectors in which foreigners are barred from participating would be viewed extremely positively by foreign investors,” Laurenceson said.
Dr Alice de Jonge, senior lecturer in Business Law and Taxation at Monash University agreed, and said that this move is part of a process to open and expand China, in a number of key sectors.
“It will open up the opportunities for foreign investors in the services industry sectors, like banking, financials and education,” de Jonge said.
“It will be a great thing for global economies, like Australia.”
The field of education is one area in which these reforms will be crucial, according to Professor Jiang Fuming, head of the School of Management at Curtin University, who explained that the impact of increased foreign investment in that particular sector will be immense.
“It will have a huge impact on people and organisations to become more innovative, efficient, and effective,” Jiang said.
Jiang said that the leadership decision was pivotal, as it also indicated a strong message that will reverberate at all levels of the Chinese economy.
“It is a signal of change, from quantity to quality, substantial development,” Jiang said.
“Paying more attention not just to numbers, but to people. It is about sustainable development over a long term.”
Asides from the clear and defined benefits to the domestic economy in China, the reforms will play a complementary role in enhancing the Belt and Road Initiative, and Jiang said this will lead to mutually beneficial partnerships across the globe.
“The Belt and Road Initiative is a huge long term plan to integrate original, and global economies together. There’s a huge difference between the Belt and Road and the developed countries plans in the past, their push for foreign investment,” Jiang said.
“This is more like pulling countries together, a positive-sum way to achieve a win-win. I think if they can do this successfully, it will open up everything, and make all economies more integrated.”
With a sizeable portion of the Belt and Road Initiative taking place within China, Laurenceson said that the relaxation of the foreign investment laws will allow overseas companies to better share their expertise.
“Not only in terms of construction but also in terms of project management services, arranging and managing the financing, and so on.” Laurenceson said.
The furthering of the successful strides towards globalisation that will result from the investment reform is, according to Jiang, tied into the Belt and Road Initiative.
“China needs an open economy, globally, they need to learn something and get something, they need to partner with other developed countries.” Jiang said.
Globalisation is the true crux of the reforms, and Laurenceson said that he hopes that the outcomes of the key party meeting are able to be achieved on the widest scale possible.
“Many of the Chinese markets remain closed, but if that changes…then China almost immediately becomes the undisputed leader and champion of globalisation,” Laurenceson said.
“Countries like Australia that support open markets would come out in loud support of Chinese moves in this direction.”