China Regulatory Brief: Liaoning Loosens FDI Regulation, Large Overseas Bank Transactions to be Reported

Liaoning to loosen restrictions on foreign investment

On June 6, Liaoning province’s Department of Commerce released measures to further open the market and use foreign capital, which will ease restrictions for foreign investors and reduce operating costs to create a fairer and more efficient investment environment.

These will be specifically aimed at investors in the service, manufacturing, and mining sectors, with supportive policies implemented to encourage investors to contribute to the state-owned manufacturing industry’s transition to mixed ownership.

China has been loosening restrictions on FDI in order to combat capital outflows in recent months. The measures also compliment the country’s wider initiative to reform the manufacturing industry under the name of ‘Made in China 2025’, which encourages innovation in the high tech sector.

Shenzhen first Chinese city to fine waste sorting violations

Shenzhen has become China’s first city to impose fines on businesses and individuals who do not comply with waste sorting rules.

A document released by the municipal government details that fines of RMB 1,000 for businesses and RMB 50 for individuals will apply to violations where general kitchen waste is not separated from recyclables such as paper, plastic, glass, and e-waste.

It also stipulates that a fine of RMB 5,000 will apply to property management companies who collaborate with unlicensed waste collection and transport companies.

Shenzhen is the first city undergoing a national government program which aims to recycle 35 percent of waste in 46 of China’s major cities by 2020.

As landfill sites run out of space, more and more cities turn to waste incineration. According to the National Development and Reform Commission (NDRC), incineration facilities almost doubled in China from 238 in 2010 to 514 in 2015. This number is expected to double again by 2020, and will be able to incinerate 54 percent of waste by 2020.

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Overseas bankcard transactions over RMB 1,000 to be reported to SAFE

China’s State Administration of Foreign Exchange (SAFE) has released a notice regarding the reporting of overseas bankcard transactions.

It stipulates that domestic card issuing banking organizations must report cash withdrawals occurring outside of China with amounts exceeding RMB 1,000 per transaction.

This does not apply to overseas transactions processed by non-banking payment institutions. Reports will be required to be made to SAFE after September 1, 2017.

Chongqing FTZ to pilot parallel imports for foreign cars

Chongqing’s Pilot Free Trade Zone (FTZ) is applying to become a trial region for parallel imports of cars, and expects approval this year.

Upon approval, the Chongqing FTZ will implement new policies such as deferred tax payments and bonded exhibitions for the sales of directly imported cars from overseas markets.

Import dealers have been enticed by the city’s status as a transport hub for the One Belt, One Road project, acting as a terminus for the Chongqing-Xinjiang-Europe International Railway.

The import method is called so as they operate parallel to traditional ‘official dealerships’, where branded car manufacturers have authorized stores that handle sales, spare parts, servicing, and surveys (4S). Prices of parallel imported cars can be around 10 to 20 percent cheaper than those sold through traditional channels as a result of cutting out 4S dealerships.

The Shanghai, Tianjin, Guangdong, and Fujian FTZs have already launched pilot parallel import schemes, with Sichuan, Xinjiang, Dalian, and Ningbo set to engage in parallel imports of cars in the near future.

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