China has eased restrictions on foreign companies in parts of its insurance, travel and delivery industries in a possible effort to reverse a slide in investment from abroad, a US business group said yesterday. Some of the measures were promised in talks with US officials in May, but the timing is unusual, coming ahead of a leadership transition during which major regulatory changes were not expected, said Christian Murck, president of the American Chamber of Commerce in China.
“I view it as partially a response to a trend of declining foreign investment,” Murck said. “I know the Chinese have been concerned about what’s driving that and what they can do to make sure foreign investment is encouraged.”
Beijing doesn’t publicize many of its regulatory changes and it’s not uncommon for the first word to come from the companies affected. The commerce ministry said this week that foreign direct investment in China declined last month for a third month. It blamed economic weakness in the US and Europe.
Regulators granted licenses to two global express delivery services this month to offer courier services in some Chinese cities, the American Chamber said. It said foreign airlines have been told they no longer are required to use the same state-owned company to distribute fare information to travel agents beginning next month. Under a change proposed last month, foreign securities firms will soon be allowed to own up to 49 percent of joint ventures, up from the present limit of 33 percent, the group said. It said they will be allowed to expand the scope of their business after two years of operation, down from the current five years.
In May, foreign insurers were allowed for the first time to sell third-party liability auto insurance in China.
The decline in foreign investment is a setback for government efforts to encourage spending by companies as part of its effort to reverse China’s deepest economic downturn since the 2008 global crisis. Authorities have imposed curbs on real estate development to cool surging housing costs, but are trying to encourage spending in other industries.
Murck said another possible area for liberalization might be the foreign investment approval process.
He said the government has circulated a proposal to allow provincial-level authorities to approve investments up to US$300 million instead of seeking approval from Beijing.
China’s latest regulatory changes come amid a slump in global consumer demand that is fueling trade tensions as countries compete harder for export markets.
On Monday, the US filed a challenge in the WTO accusing China of improperly subsidizing exports of autos and auto parts. Beijing filed its own WTO case the same day challenging US anti-dumping measures.