Dear Readers,
Every year at this time Beijing traffic becomes a little worse, with more than the occasional temporary road closure for traveling officials. On March 5, 2008, the annual meeting of the National People's Congress and China People's Political Consultative Conference started, with Premier Wen Jiabao opening with a report on government action. In his speech, he highlighted some of the following points:
Targets for Economic and Social Development:
- GDP growth of 8% for 2008
- Inflation should be maintained around 4.8%
Food/Product Safety
- In order to put China in line with international standards, it will develop or modify 7,700 national standards for food, drugs and other consumer goods
Energy and Environment
- China will take measures to reduce pollution in 2008 by shutting down backward facilities in the electricity, steel, cement, coal and papermaking industries
Foreign Investment
- China will take measures to ban foreign investment in energy-intensive and highly polluting industries, limit or ban businesses in some areas of resource exploitation and correct illegal measures taken by governments to attract foreign investment
Securities Market
- Encourage market for growth enterprises, increase development of bonds, and maintain fair, open and equitable environment
Government Departments
- China will focus on integrating the functions of its many government departments, reducing overlap and better coordinating functions between small and large departments
While the goals set by Premier Wen seem somewhat broad and optimistic, from a business perspective, we can draw several conclusions on China's direction on foreign investment. My thoughts: China understands its basic economic competitive advantage as a production-oriented nation. However, in so recognizing this, it is attempting to control/increase product quality (Food/Product Standards) and encourage growth/tech industries (Securities Market). Further, it is coordinating economic with sustainable development, in protecting its Energy and conserving its Environment.
Foreign Investment, though still very important to its continued growth, is now relatively less so, with China’s focus on developing domestic industries, while attempting to shift foreign investment out of environmentally-sensitive industries, and equalizing treatment among foreign and domestic competitors.
Though this is simply a speech by Wen Jiabao, as a long-term resident of China, even small changes towards these goals will greatly affect China's development as a nation.
Edward Lehman
elehman@lehmanlaw.com
