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Blog
Mar 01, 2021

The year 2020 was a turning point in many fronts in the Chinese and global economy. In the wake of the COVID-19 pandemic, rising geo-political tensions and rapid changes in the global trade environment have led to major changes in the world markets. Naturally, multinational companies, entrepreneurs and private investors must recalculate where and how they do business in the global arena. Everyone is currently on the hunt for new emerging opportunities. This is where China has attracted great attention.

For many, China is seen as daunting and complex market. However, to those who pay attention, the government in Beijing is determined to continue its trend of lifting restrictions on foreign investments in order to stimulate the economy. Meaning that now more than ever, China constitutes as a major opportunity.

Here are 5 key changes that took place in China in the year 2020 that are worth paying attention to:

  1. The shift from high-speed growth to high-quality development
    1. China’s economy is undertaking a significant transition to high-quality development. This transition can be measured by indicators such as economic structural adjustments, regional coordination, social progress, ecological progress and the general improvement of people’s livelihood. Despite seeing a decline in growth rate, the Chinese economy is releasing growth potential.train
  2. Ease of Restriction on Business
    1. China is determined to build a market-oriented and law-oriented business environment. China is optimizing and decentralizing administrative services and authorities, as part of the Regulations on Optimizing Business Environment, which came into act as of January 2020. Moreover, China will promote competition neutrality, treating domestic and foreign enterprises equally in terms of market access financing. Legislation such as the foreign Investment Law of the People’s Republic of China, guarantees a higher level of opening.
  3. Innovation
    1. Innovation in the fields of science and technology played a major role in China’s economic development. Fields such as 5G, AI, cloud computing and Information Technologies rapidly penetrate all areas of society thus leading to an upgrade of all industries. The World Intellectual Property Organization (WIPO) claims that China has changed from a major technology user to a technology producer, and technological innovation has gradually become an important driving force for China's economic growth.Żarówka
  4. Free Trade Zones in China
    1. In accordance with the opening up of the Chinese Economy, the establishment of Free Trade Zones in China (FTZs) demonstrate China’s proactive strategy of structural reforms and joining the global trend of global economic development. An FTZ is a specific area within a country or region, in which special preferential tax policies and regulations are implemented. From the year 2013 to the year 2020, China established 21 pilot FTZs across the country, including the declaration of Beijing, Hunan and Anhui as FTZs in the year 2020.
  5. Tax Measures to relief COVID-19 Impact
    1. In order to ease to negative impact of the COVID crisis, China has introduced policies to support business and production. These measures include extension of carrying tax losses for numerous industries, reduction of VAT for small-scale payers and social security payment exemptions for small and medium sized businesses. Additionally, China lifted restrictions on previously prohibited sectors for foreign investment and expanded the list of encouraged industries for foreign investment.

Ecat Venture Team