Foreign firms need to adjust themselves to suit China’s new round of opening up

By Wang Jiamei Source:Global Times Published: 2017/11/14 21:53:41

China's opening-up policies are entering a new stage as the government has just announced it would relax a broad range of limits on foreign ownership in multiple sectors.

The Ministry of Foreign Affairs said on Thursday that China would start a pilot program to allow majority foreign stakes in joint ventures in the new-energy vehicle business in the first half of next year, Reuters reported. At present, foreign companies can hold up to 50 percent stakes in car joint ventures in China. The Chinese government will also ease or remove restrictions on foreign investment in financial institutions such as fund management firms, Vice Finance Minister Zhu Guangyao announced Friday.

Giving foreign capital greater access to domestic sectors of course signals a major step in China's opening-up. For a long time, some Western media outlets have focused on topics such as foreign companies shutting stores in China or the increasingly tough environment for foreign businesses in the country. But the new developments in China's opening-up policies appear to contradict their reports. The contrast only underscores their lack of understanding about China, not to mention its reform and opening-up process.

After more than three decades of reform and opening-up, it is inevitable for China to adjust its regulations and rules to improve the development of its domestic industries and markets. While some of the changes may make some foreign companies feel "uncomfortable," these changes should not be misunderstood as a step backward in China's opening-up to the world.

Chinese top leaders made it clear at the 19th National Congress of the Communist Party of China that the nation will only become more open, which is an inevitable trend in China's economic development and in line with the development needs of the global economy.

Nevertheless, China's current requirements for openness are completely different from those of the past. China's basic manufacturing capabilities have seen an overall improvement; its financial markets have been further developed, and its regulations have been tightened. Given these trend, it is understandable for China to raise its requirements for foreign investment, leading to a certain painful adaptation for some companies.

But there is no need to worry about the adjustment. Companies that want to gain a foothold in the Chinese market must have their own strengths and grasp the opportunities of China's economic development. The easing of restrictions on foreign ownership of electric car companies is a good example. With greater market access, a massive consumer sector and strong government support, foreign electric car manufacturers will surely grow remarkably in China.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn



Posted in: EYE ON THE ECONOMY

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