Posts Tagged ‘China’
China’s February Foreign Direct Investment Increases 32.2%
Monday, March 21st, 2011Foreign direct investment in China climbed in February, indicating investor confidence in the world’s second-biggest economy.
Investment rose 32.2 percent to $7.8 billion last month from a year earlier, the Ministry of Commerce said in a statement on its website today. That compares with a 23.4 percent gain in January.
Raising wages and reducing income inequality will be among the government’s top tasks in the next five years as the nation switches the focus of growth to consumption from investment, Wen said on March 5.
Foreign investment in the first two months rose 27.1 percent to $17.8 billion, the commerce ministry said today. The number of newly approved foreign-invested companies in the first two months of the year rose 7.5 percent from a year earlier to 3,399, according to the statement.
Chinese Premier sets 7% growth target
Monday, February 28th, 2011An annual growth target of 7 percent over the 12th Five-Year Plan (2011-2015) has been set to ensure sustainable development, Premier Wen Jiabao said on Sunday.
“We must not any longer sacrifice the environment for the sake of rapid growth and reckless roll-outs, as that would result in unsustainable growth featuring industrial overcapacity and intensive resource consumption,” Wen said during an online chat with Internet users.
The target was lower than the 7.5 percent set for the previous five years, when the country’s economy actually grew at an annual rate of around 10 percent from 2006 to 2010.
China’s GDP growth reached 10.3 percent last year. Most economists expect growth to be around 9 percent this year, and slightly less in 2012.
Increased efforts will be made to improve people’s living standards, and the government will adopt new performance evaluations for local governments to hasten economic restructuring.
He also promised to strengthen efforts to contain increases in prices of food and other commodities, which have stoked inflation. Maintaining price stability has always been a priority as “rapid price rises have affected people’s lives and even social stability”, he said, adding adequate grain supplies and abundant foreign exchange reserves would help curb inflation.
The consumer price index (CPI), a main gauge of inflation, rose 4.9 percent in January from a year earlier as food prices increased 10.3 percent due to rising demand and a drought in key grain-growing regions. Food accounts for one third of the CPI basket. The CPI increased 4.6 percent in December and 5.1 percent in November, a 28-month high.
The government has taken a slew of measures to keep prices under control, including increasing grain output and boosting drought relief. To mop up excess liquidity, the central bank has lifted the reserve requirement ratio (the minimum reserve banks must hold) for commercial banks eight times since the start of last year, and hiked interest rates three times since mid-October.
The government set the CPI target at 4 percent this year, a goal most analysts said will be hard to achieve.
According to the China Quarterly Macroeconomic Model, a study jointly conducted by Xiamen University and the National University of Singapore, China’s CPI will hit 5.4 percent in 2011, 2.07 percentage points more than last year. The study predicted it will ease to 4.55 percent in 2012.
China attracts 106 billion dollars in direct investments
Thursday, January 20th, 2011China attracted record-high direct investment volume – 106 billion dollars in 2010, which is a leap of 17.4%, compared to the previous year.
An opposite tendency was observed in 2009, when investments shrunk by 2.3%.
Last year, approximately 20% of all foreign investments were directed to the real estate sector. At the same time, the inflow of investments to poorer and less-developed regions in the country increased significantly.
While, China’s external investments rose even faster. They have increased by 36.3%, totaling 59 billion dollars. The Chinese companies bought ready-made companies abroad, as well as a variety of already launched perspective projects.
New Regulation on Administration of Representative Offices in China
Monday, December 13th, 2010On November 19, 2010 the State Council promulgated Regulation of the Administration of Representative offices of foreign enterprises (order of the State Council no. 584). Regulations will come into effects on March 1, 2011.
The previous Regulations provided that Representative Office shall only engage in activities which are not profit-generating unless otherwise stipulated by the agreement between China and the country in which foreign enterprise resides. The Regulations promulgated recently expressly provides that activities related to the business of the foreign enterprises which a Representative Office may engage in includes:
- market investigation, display, promotional activities in connection with the products or services of foreign enterprises;
- Liaison activities in connection with products sales, services provision, domestic procurement and domestic investment of foreign enterprises.
Article 35 of the Regulations expressly provides the legal liabilities for the engagement in profit-generating activities and increases the fine and legal liabilities for such violations, including ordering a Representative Office to correct and confiscate the illegal gains and the tools, equipments, raw materials, products (commodities) and other property that are specially used for engaging in profit-generating activities, and imposing a fine of no less than RMB50 000 and no more than RMB500 000. In egregious cases, the registration certificate of a Representative Office shall be revoked.
The Representative Offices shall provide an annual report to the Registration Authorities between March 1 and June 30. The content of such annual report shall include the legal existing and standing information of the foreign enterprises, the information on the carry-out of business activities of the Representative Offices and the information on the expenses and expenditure and revenues audited by their accounting firms and other related information.
Failure to provide such report will result in a penalty of RMB10000 to RMB30000.
The Regulation provides the new rules for the publication of the establishment registration. The Regulations provide that the registration authorities shall record the registration matters of a Representative Office in the registrars to be made available to or copied by the general public. Moreover, the Regulations provide that foreign enterprises shall announce the establishment or change of the Representative Offices to the general public via media designated by the registration authorities.
China allows foreign institutions to open RMB accounts
Thursday, October 14th, 2010The People’s Bank of China end of September released regulations to allow foreign institutions to open cross-border RMB-settlement accounts at locally registered banks from Oct. 1, which will further expand its ongoing RMB-settlement trial program.
According to the rules published on the central bank’s website, an overseas institution can choose either a domestic bank or a local unit of a foreign bank to open an RMB-settlement account.
However, the PBOC posted some restrictions on such accounts. For example, the RMB in these accounts are not allowed to be converted into foreign currencies or withdrawn in cash.
The central bank said the rules do not apply to RMB-settlement accounts opened by foreign central banks, interbank settlement accounts set up by foreign banks, special RMB accounts opened by qualified foreign institutional investors for trading securities in China, or special accounts for investing in China’s interbank bond markets.
Using a Hong Kong company to operate a business in China
Saturday, April 4th, 2009Hong Kong has historically been a gateway to China. Despite the rise of major financial and trading centers in the mainland (Shanghai, Shenzhen, Beijing, Guangzhou etc.), the city has remained attractive for foreign companies expanding into the region because of its free market system, clean government, low taxes, world-class infrastructure, skilled workforce and international lifestyle, among other advantages.
For China residents, especially foreign nationals, incorporating in Hong Kong has always been a very strong alternative to setting up a business in a mainland Chinese city, where start-up. Consulting and trading are two areas where using Hong Kong has become a trend.
Consultants in China can use their Hong Kong company to bill their customers, both in China and overseas. For their China customers, providing services as company would definitely be better perceived than doing it as an individual. For international clients, one can provide China-related consulting services by using a Hong Kong company, which technically is part of China, without the price tag that comes with incorporating in mainland China.
Sole traders living in China can use a Hong Kong company to receive payments from international clients and pay their Chinese suppliers. Considering that China doesn’t tax offshore profits, and mainland China is considered offshore, this is a very attractive solution to conduct international trade without the need to rent and operate an actual office.
There are disadvantages for using Hong Kong companies to operate in China however. The first one would be the inability to receive RMB payments and bill your Chinese customers in RMB. Indeed, Chinese firms and individuals will require in most cases to pay in Chinese Yuans (or RMB, the official currency), and will need an official tax receipt (“fapiao”) to justify their expenses in their accounting records. A Hong Kong company is legally a foreign company in mainland China and as so is not able to issue such invoices. Furthermore, Chinese Yuans/RMB cannot be sent from mainland China to your Hong Kong company bank account, meaning the need for your customers to change their money into USD/HKD first which can be a burden.
Another disadvantage would be the visa and other tax/legal issues if you live in China. As we said earlier, a Hong Kong company is considered a foreign company in China and as does not entitle the owner for a residence permit in mainland China. In face of the increasing tightening of the visa regulations in mainland China, this may mean frequent trips to Hong Kong or even to your home country. This can be solved however when you set up a representative office for your Hong Kong company in a Chinese city.
We register Hong Kong companies for USD1,200 only. Feel free to contact us for more information or to receive the application form. Only a passport copy is required and the whole procedure can be completed within 15 days.
