November 1, 2019 / 11:30 AM / 10 days ago

China plans to let foreign-funded firms raise more funds to boost foreign investment

BEIJING (Reuters) - China plans to let foreign-funded firms raise money via stock and bond issuance both in China and overseas, and let them freely repatriate profits, a ministry website showed on Friday, as it moves to encourage foreign investment in the country.

The Ministry of Justice published the draft rule, designed to facilitate a foreign investment law that would take effect on Jan. 1 next year, on its website.

“Foreign-funded enterprises may raise funds through publicly issuing stocks, corporate bonds, and other financing instruments, as well as borrowing from financial institutions, both in China or outside China in accordance with laws,” the draft rule said, without giving details.

China has repeatedly promised to further open its markets to foreign investment, and clear hurdles and restrictions for the benefit of foreign investors, but has stressed such decisions would be based on the economy’s own needs and not on external pressure.

Despite the reforms of recent years, foreign businesses say progress has been slow with foreign investment in many industries still restricted while promises of greater access do little more than repeat earlier pledges.

Technology transfers have also been a major concern and a source of tension between China and the United States, which have been embroiled in a trade war for more than a year.

China will eliminate all restrictions on foreign investments not included in its self-styled “negative lists,” a vice commerce minister said on Tuesday, and also will “neither explicitly nor implicitly” force foreign investors and companies to transfer technologies.

The draft rule said China will establish a system that penalizes intellectual property theft, and reiterated that government entities should not force tech transfer from foreign-funded firms in the name of administrative procedures.

It said if foreign investors are required to provide materials containing business secrets, under certain circumstances according to the law, such disclosures should be limited to government officials with relevant responsibilities.

Reporting by Yawen Chen and Kevin Yao; additional reporting by Samuel Shen; editing by Jason Neely

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