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China unveils new plan to further open economy to foreign investment

China unveils new plan to further open economy to foreign investment

China's State Council, the country's Cabinet, issued on Tuesday new measures to further open the world's second-largest economy to foreign investment, including easing restrictions on investment in banks and other financial institutions.

The move comes as President Xi Jinping seeks to project China as a leader in combating increasing global protectionism.

Xi defended globalisation in a speech at the World Economic Forum in Davos on Tuesday amid mounting public hostility in the West.

China itself, however, has been the target of complaints from foreign business groups who have criticised its slow pace of market reforms and say its national security regulations and industrial policies are at odds with its reform goals.

The Cabinet said in a statement posted on its website that China would lower restrictions on foreign investment in banking, securities, investment management, futures, insurance, credit ratings and accounting sectors.

No further details were provided, nor a timetable for their implementation.

The country's state planner had indicated at the end of last year that China would take measures to relax foreign investment in certain sectors.

The government will also allow foreign-invested firms to list on the Shanghai and Shenzhen exchanges and a new third board, and also allow them to issue corporate and convertible bonds, it added.

The Cabinet said the measures were intended to create a “fair and competitive” environment that puts “domestic and foreign companies on an equal footing.”

“The devil is always in the details,” said Arthur Kroeber, partner of Gavekal Dragonomics. “How the rules get implemented will be very important.”

Restrictions on foreign investment in telecommunications, internet, culture, education and transportation sectors will be opened “in an orderly way”, the State Council said.

The measures will also cancel restrictions on foreign investment in the manufacture of rail equipment, motorbikes, fuel ethanol, and oils and fats processing, while easing restrictions on unconventional gas, including oil shale, oil sands and shale gas, and mineral resources.

Foreign investment in oil and natural gas projects will shift from an approval based system to a registration system, the notice said.

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