Hebei Province Urges More FDI Attraction

December 21, 2010 Posted by China Briefing Reading Time: 3 minutes

Dec. 21 – China’s Hebei Province, the northeastern coastal province that completely surrounds Beijing and Tianjin, has recently issued a new document that encourages the acceleration of foreign direct investment (FDI) into the region. The document promises the implementation of related fiscal measures, land use policies and favorable systems for FDI inducement in the next five years.

The Hebei provincial government released the “Opinions on Enlarging Openness and Accelerating Open Economy Development (Jizheng [2010] No.134)” on November 25. The document sets up a series of five-year goals with regards to the volume of actual foreign capital use, capital attraction from outside the province, foreign trade, and outbound FDI. It vows that by 2015, Hebei Province will reach US$8 billion of actual foreign capital use, with an average annual growth rate at 15 percent; it will realize US$50 billion of capital attraction from outside Hebei, with an average annual growth rate at 15 percent; it will see its foreign trade volume go up by 12 percent annually in average, to US$70 billion; it will also accomplish a 12 percent average annual growth in outbound FDI.

The document has also clarified several aspects of related favorable policies:

It promises government budget support to the foundation of the “Open Economy Development Fund” and plans to spare US$7.5 million to the fund in 2011 and add more in the future
It mentions major jointly invested projects will be considered as priorities when the government assigns land use quotas
It states that the opportunity exists for foreign-invested land-intensive project developers to receive up to 30 percent discounts of the lowest industrial land transfer price when they obtain lands
It makes an effort to ease FDI access to the province by authorizing the municipal governments to approve foreign invested projects with capital of less than US$300 million if these projects meet the related criteria mentioned in the document in detail
It pledges monetary awards to domestic companies that actively attract FDI
It encourages foreign company bond issuance for financing purposes in order to boost mergers and acquisitions (M&As).

Sectors that the government will give the most support to are traditionally strong sectors in the province such as equipment manufacturing, petrochemical and pharmaceutical; strategic emerging industries such as new energy, high-end equipment manufacturing, biopharmaceutical, new-generation communication, new material, green technology and green automobiles; modern services including modern logistics, financial insurance, recreation and tourism. The document especially encourages foreign investors’ involvement in outsourcing services.

Hebei’s provincial government also urges local foreign investor-oriented promotions on a regular basis. In particular, it calls for more attention to investment from emerging economies such as Australia, India and countries in the Middle East, Africa and Latin America.

Exports and outbound FDI will also be highly encouraged. According to the document, the government will make use of various measures to boost the exports of agricultural products, textiles, electrical products and high-tech products and promote overseas resource exploitation, enterprise establishment and M&As by Chinese enterprises.

According to statistics from the provincial government’s official web site, the actual use of foreign capital in the province saw a year-on-year growth of 1.6 percent to US$3.69 billion in 2009. Asian and North American countries are the largest source of investors accounting for 73.3 percent of the province’s total investment in 2009. The province is looking to upgrade its industrial structure and transform its development mode through the increasing FDI attraction.

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