Chinese Government Favours Investment That Meets the Country's Development Goals

Organization (WTO) in 2001 in order to conform to WTO investment requirements. In practice, the Chinese

government favours investment that meets the country's development goals such as those in higher value-added

sectors and advanced rather than basic manufacturing. Its investment objectives are outlined in the Foreign

Investment Catalogue, which divides sectors of the economy where foreign investment is encouraged, restricted and

prohibited. Sectors which are "prohibited" for foreign investment include media-related industries and compulsory

basic education. In order to protect local companies, the government also implements administrative measures to

limit foreign investors' ability to participate in the domestic markets.

China offers a wide range of incentives to foreign investment at national, regional and provincial levels. These

include, for example, reduced taxes and import/export duties, funding support for start-ups as well as priority

treatment in acquiring basic infrastructure services. Concerns, however, have been raised about the complexity and

contradiction between China's investment catalogue and other investment regulations. Besides, inconsistent law

enforcements pose a major problem for investors in China's market.

Since its accession to the WTO, China's trade policy has engaged on a liberalising trend. As of March 2010, it has

concluded FTAs with the ASEAN, Chile, Pakistan, New Zealand, Singapore and Peru and is negotiating