Impacts of China's switch on foreign investment policy slight: Experts

BEIJING, Nov. 20 (Xinhuanet) -- China will abolish the favoritism of companies with foreign investments on December 1, 2010, which is a clear sign of foreign investment policy switch. However, the change won't cause serious impacts on foreign investors, experts said Friday.

Wu Yongqiang, special observer from the Voice of China, said the government will do so by claiming urban maintenance, construction tax and educational surtax, which means companies with foreign capital won't be able to enjoy the favorable tax policy over domestic companies any more.

Wu said that the special cuddling was given to the companies with foreign capital in the early stage of China's reform and opening-up. And now that China's economy steps into an upper structural stage, abolishing the policy is a sooner-or-later matter as it focuses more on quality of foreign investment than quantity.

Foreign investors are showing themselves uneasy over the change. According to a November 17 report by the United States-China Business Council, nearly 90 percent of the US companies felt the business environment become more and more "unfriendly", though their profits in China are over the global average level.

Li Changjiu, economic analysts with the Xinhua's Center of World Studies, said that the policy won't have big impacts. He said that the preferential policy is one of the factors attracting foreign capital, among others of market potential, political situation, labor cost and added-value of land resource. "China is a stable and vigorous market with big potential, and foreign investors will still get good returns," he added.

Source: Global Times