Tu Haiming: Pruning negative list boosts HK biz opportunities 
By Tu Haiming
On Sept 8, the National Development and Reform Commission (NDRC) and the Ministry of Commerce released the latest negative list on foreign investment access, reducing the number of restrictive measures from 31 to 29. The updated list will lift all restrictions on foreign investment in the manufacturing sector when it takes effect in November.
The further shortening of the negative list demonstrates once again China’s commitment to further opening its markets. Hong Kong should identify and tap the opportunities created by the move.
China published the initial negative list on foreign investment access in the wake of the establishment of the China (Shanghai) Pilot Free Trade Zone in 2013. It has been gradually trimmed down from 2017 to 2021. In 2021, the restrictive measures imposed on the manufacturing sector were declared no longer applicable to the pilot free trade zones. And the latest move is tantamount to fully opening up the Chinese mainland’s manufacturing sector.
Hong Kong is the largest source of external investment for the mainland. At the end of last year, Hong Kong’s cumulative investment on the mainland amounted to $1.57 trillion, accounting for nearly 58.6 percent of total external investment at the end of 2022. The mainland remains a lucrative market for overseas businesses, whereas Hong Kong is a “capital pool” for them. The more the mainland opens up, the more this capital pool will expand. Foreign businesses see Hong Kong as a free port with free flow and full convertibility of currencies, and it would benefit them the most to place their production and sales operations on the mainland while keeping their capital in Hong Kong.
The removal of the last barriers in the manufacturing sector will stimulate overseas investment in the mainland market. Hong Kong’s role as a capital pool is crucial to foreign businesses on the mainland; the city’s financial sector should pay great attention to effects of the removal and create more financial products and services that cater to the rising needs of the market, expanding the city’s capital pool.
On Sept 7, the Ministry of Commerce, the National Health Commission and the National Medical Products Administration announced a proposal to allow the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen and Hainan, with the exception of traditional Chinese medicine hospitals and mergers and acquisitions of public hospitals.
Currently, foreign investors can hold no more than a 70 percent stake in foreign-invested hospitals in China. The proposed pilot program of allowing wholly foreign-owned hospitals is a major breakthrough that will create opportunities for Hong Kong hospitals to access the mainland market.
Thanks to Hong Kong’s top-rated healthcare system, the United Nations reported that the city’s average life expectancy reached 85.5 years in 2023, among the highest in the world.
Hong Kong enjoys distinct advantages participating in the hospital pilot program. First, its sublime medical resources and outstanding medical standards are widely recognized on the mainland, and have attracted numerous mainland patients to the city for medical treatment. Second, Hong Kong’s medical resources can benefit mainland patients and help raise the mainland’s medical standards, which in turn will popularize the city’s medical sector. Third, the Hong Kong Special Administrative Region government liaises closely with State ministries and commissions, and has established cooperation mechanisms with some of the pilot cities, which can give Hong Kong the needed support in building hospitals on the mainland. Hong Kong’s medical and healthcare sector should actively take part in and benefit from the pilot program by making full use of its advantages.
Recently, the minister in charge of the NDRC indicated that restrictions on foreign investment access to China’s services industry will be lifted in unconventional ways. Since this year, authorities have kicked off pilot programs to allow foreign investment in added-value services in telecommunications and other sectors. Next in line will be preparatory work for opening up more services sectors by revising the Catalogue of Encouraged Industries for Foreign Investment.
The services industry is inarguably one of Hong Kong’s key strengths. In the ambit of the modern services industry, for example, apart from financial services, the city’s international arbitration services are recognized by 140 countries and regions around the world; it is ramping up efforts to building a center for international legal and dispute resolution services in the Asia-Pacific region. The city is also leveraging its clear advantage in intellectual trading services to establish a regional intellectual property trading center. Furthermore, Hong Kong has an edge in promoting consumption of specialty and luxury goods.
Regarding the opening-up of the services industry, while it takes time to transition from pilot programs to full opening-up, industry stakeholders should be aware that the time is about to come for full-scale access to the mainland market.
It is necessary to ensure the development of foreign businesses upon their entry into the mainland market. The head of the NDRC added that foreign investments in sectors not included on the negative list will be treated equally as domestic investments, affording foreign businesses national treatment. This signifies China’s further opening-up, which is the natural outcome of development today.
In the early days of reform and opening-up, China’s low costs of land, labor and energy, as well as its less stringent environment-protection regulations, were of great appeal to foreign businesses. With the cost advantages diminishing, what factors can China rely on to entice foreign investments? Apart from its colossal market, skilled labor and complete industry chains, China can count on an excellent business environment to be underpinned by institutional opening-up.
When Xia Baolong, director of the Hong Kong and Macao Work Office of the Communist Party of China Central Committee, addressed the opening ceremony of the 2024 National Security Education Day, he noted: The mainland, the market and consumption patterns have all changed with changing times; Hong Kong society should keep pace with the times and strive to make a difference so as to open up new horizons for Hong Kong’s development amid changes. In this regard, the central government’s latest move to expand access for foreign investment is definitely an opportunity for Hong Kong to seize.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of Bauhinia Magazine.
Source: China Daily
https://res.youuu.com/zjres/2024/9/25/ZEZeCpp7uTqKgoAWa5mrS2IY5mVyScpSgdZ.png
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By Tu Haiming
On Sept 8, the National Development and Reform Commission (NDRC) and the Ministry of Commerce released the latest negative list on foreign investment access, reducing the number of restrictive measures from 31 to 29. The updated list will lift all restrictions on foreign investment in the manufacturing sector when it takes effect in November.
The further shortening of the negative list demonstrates once again China’s commitment to further opening its markets. Hong Kong should identify and tap the opportunities created by the move.
China published the initial negative list on foreign investment access in the wake of the establishment of the China (Shanghai) Pilot Free Trade Zone in 2013. It has been gradually trimmed down from 2017 to 2021. In 2021, the restrictive measures imposed on the manufacturing sector were declared no longer applicable to the pilot free trade zones. And the latest move is tantamount to fully opening up the Chinese mainland’s manufacturing sector.
Hong Kong is the largest source of external investment for the mainland. At the end of last year, Hong Kong’s cumulative investment on the mainland amounted to $1.57 trillion, accounting for nearly 58.6 percent of total external investment at the end of 2022. The mainland remains a lucrative market for overseas businesses, whereas Hong Kong is a “capital pool” for them. The more the mainland opens up, the more this capital pool will expand. Foreign businesses see Hong Kong as a free port with free flow and full convertibility of currencies, and it would benefit them the most to place their production and sales operations on the mainland while keeping their capital in Hong Kong.
The removal of the last barriers in the manufacturing sector will stimulate overseas investment in the mainland market. Hong Kong’s role as a capital pool is crucial to foreign businesses on the mainland; the city’s financial sector should pay great attention to effects of the removal and create more financial products and services that cater to the rising needs of the market, expanding the city’s capital pool.
On Sept 7, the Ministry of Commerce, the National Health Commission and the National Medical Products Administration announced a proposal to allow the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen and Hainan, with the exception of traditional Chinese medicine hospitals and mergers and acquisitions of public hospitals.
Currently, foreign investors can hold no more than a 70 percent stake in foreign-invested hospitals in China. The proposed pilot program of allowing wholly foreign-owned hospitals is a major breakthrough that will create opportunities for Hong Kong hospitals to access the mainland market.
Thanks to Hong Kong’s top-rated healthcare system, the United Nations reported that the city’s average life expectancy reached 85.5 years in 2023, among the highest in the world.
Hong Kong enjoys distinct advantages participating in the hospital pilot program. First, its sublime medical resources and outstanding medical standards are widely recognized on the mainland, and have attracted numerous mainland patients to the city for medical treatment. Second, Hong Kong’s medical resources can benefit mainland patients and help raise the mainland’s medical standards, which in turn will popularize the city’s medical sector. Third, the Hong Kong Special Administrative Region government liaises closely with State ministries and commissions, and has established cooperation mechanisms with some of the pilot cities, which can give Hong Kong the needed support in building hospitals on the mainland. Hong Kong’s medical and healthcare sector should actively take part in and benefit from the pilot program by making full use of its advantages.
Recently, the minister in charge of the NDRC indicated that restrictions on foreign investment access to China’s services industry will be lifted in unconventional ways. Since this year, authorities have kicked off pilot programs to allow foreign investment in added-value services in telecommunications and other sectors. Next in line will be preparatory work for opening up more services sectors by revising the Catalogue of Encouraged Industries for Foreign Investment.
The services industry is inarguably one of Hong Kong’s key strengths. In the ambit of the modern services industry, for example, apart from financial services, the city’s international arbitration services are recognized by 140 countries and regions around the world; it is ramping up efforts to building a center for international legal and dispute resolution services in the Asia-Pacific region. The city is also leveraging its clear advantage in intellectual trading services to establish a regional intellectual property trading center. Furthermore, Hong Kong has an edge in promoting consumption of specialty and luxury goods.
Regarding the opening-up of the services industry, while it takes time to transition from pilot programs to full opening-up, industry stakeholders should be aware that the time is about to come for full-scale access to the mainland market.
It is necessary to ensure the development of foreign businesses upon their entry into the mainland market. The head of the NDRC added that foreign investments in sectors not included on the negative list will be treated equally as domestic investments, affording foreign businesses national treatment. This signifies China’s further opening-up, which is the natural outcome of development today.
In the early days of reform and opening-up, China’s low costs of land, labor and energy, as well as its less stringent environment-protection regulations, were of great appeal to foreign businesses. With the cost advantages diminishing, what factors can China rely on to entice foreign investments? Apart from its colossal market, skilled labor and complete industry chains, China can count on an excellent business environment to be underpinned by institutional opening-up.
When Xia Baolong, director of the Hong Kong and Macao Work Office of the Communist Party of China Central Committee, addressed the opening ceremony of the 2024 National Security Education Day, he noted: The mainland, the market and consumption patterns have all changed with changing times; Hong Kong society should keep pace with the times and strive to make a difference so as to open up new horizons for Hong Kong’s development amid changes. In this regard, the central government’s latest move to expand access for foreign investment is definitely an opportunity for Hong Kong to seize.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of Bauhinia Magazine.
Source: China Daily
https://res.youuu.com/zjres/2024/9/25/ZEZeCpp7uTqKgoAWa5mrS2IY5mVyScpSgdZ.png
