Since the reform and opening up, China is accelerating the pace of using foreign capital, and has formed a multi-level and omni-directional pattern. Overall, China’s use of foreign investment has shown a rising trend, although there was a slight decline in 2012, but the rising trend reappeared in 2013. In 2013, China’s actual use of foreign investment was $ 117.586 billion, a growth of 5.25％ over the previous year.
Chinese-Foreign Equity Joint Ventures, Chinese-Foreign Cooperative Joint Ventures, Wholly Foreign-Owned Enterprises are the three main forms of foreign investment in China. Other investment forms include Joint Stock Limited Companies with Foreign Investment, Foreign Investment Companies, Chinese-Foreign Cooperative Exploitation, BOT, etc.
Chinese government’s foreign investment-related industrial policies are embodied in the Provisions on Guiding the Orientation of Foreign Investment (Amended in 2004), according to which projects with foreign investment fall into 4 categories, namely encouraged, permitted, restricted and prohibited ones. The projects with foreign investment that are encouraged, restricted and prohibited are listed in the Catalogue for the Guidance of Foreign Investment Industries. And those that don’t fall into the categories of encouraged, restricted or prohibited projects are the permitted projects with foreign investment, which are not listed in the Catalogue for the Guidance of Foreign Investment Industries. Foreign investment projects falling into the encouraged and the restricted category in the Catalogue and involving technology transfer, imported equipment for self-use within the aggregate investment, excluding commodities listed in the Catalogue of Import Commodities for Foreign Investment Projects with no Tax Exemption, are exempted from the tariffs and import value-added tax. With respect to encouraged Foreign Investment Projects, the preferential treatment specified in the relevant laws and administrative regulations are offered. For those who engage in the construction or operation of a project involving energy, transportation and urban infrastructure (including coal, petroleum, natural gas, power etc..), wherein a large investment is made and a long term is required for recouping the capital outlay, the business scope thereof may also be expanded to cover the related items subject to approval.
Taxes applied to foreign-invested enterprises, foreign enterprises and foreign individuals (including compatriots from Hong Kong, Macao and Taiwan) in China are: corporate income tax, individual income tax, turnover taxes (including value-added tax, consumption tax, and business tax), land value-added tax, stamp duty, vehicle and vessel usage license plate tax, urban real estate tax, etc.. Import and export goods shall pay tariff and import value-added tax in accordance with Customs’ tariff regulations and relevant provisions.