Analysis of the Investment Activity Regulation in Priority Sectors of the Economy: A Case Study of China

The attractiveness of the PRC as a recipient of foreign capital is determined by a high level of socio-economic and political stability, a capacious domestic market, cheap labor and an active national investment policy. Thus, from the very outset of the "policy of openness to the outside world" (1979), a preferential investment regime for foreign investors was established in China maintained until now. Despite the sharp shrinking of cross-border investment at the turn of the 21st century and the economic stagnation in the majority of developed countries, China is actively attracting foreign direct investment heading the list of leading recipients of foreign capital. The PRC's accession to the WTO (2001) had a great impact on the FDI growth. The principles of the "open unified foreign trade policy in compliance with the GATT requirements" largely contributed to attracting foreign investors to China. After the WTO accession, the volume of foreign investment in China rose 2.5 times of which the overwhelming majority belonged to FDI and China actually refused from such forms of foreign investment as foreign loans, credits, international leasing, etc. Since 2005 until lately, the foreign investment inflows into the PRC came mainly from Hong Kong, Singapore and such offshore zones as the Virgin Islands and the Cayman Islands. In fact, after accession to the WTO, adjustments were made only in respect of certain previously adopted laws encouraging the attraction of foreign investment to the country. Global trends in capital movements are getting increasingly apparent in China, a growth of interest in foreign portfolio investment is observed involving the acquisition by foreign investors of securities issued by Chinese companies.