Following Beijing’s announcement of a revised foreign direct investment (FDI) catalogue at the end of last year, the investment climate in China may be changed for good. Speakers at CHINA ECONOMIC REVIEW’S May 20 event on FDI approached the challenges posed by the new catalogue from a number of perspectives.
Jeffery J. Greene, partner at law firm DLA Piper in Shanghai, said that China has arrived at a point where it can afford to be more stringent about what kind of FDI is encouraged.
“‘Foreign direct investment’ is really a sanitized term for ‘foreign direct ownership,’” he said, “China now has to ask itself: ‘What is the purpose of foreign ownership?’”
Ming Zu, senior consultant for DLA Piper in Shanghai, explored the impact of regulations in the real estate sector in particular. He singled out two of the most crucial changes: First, institutional property investment of any kind now requires endorsement from the Ministry of Commerce; and second, all foreign real estate investors must have a physical commercial presence on the mainland, rather than buying stakes off-shore.
Ming warned investors that they couldn’t just wait for the problems to go away. “These cooling measures are long-term,” he said.