June 5, 2013 / 2:27 AM / 6 years ago

China plans to cut red tape to boost foreign investment: paper

A participant stands in front of a backdrop during the Asian Financial Forum in Hong Kong January 14, 2013. REUTERS/Bobby Yip

SHANGHAI (Reuters) - China plans to gradually begin easing applications and approval procedures for foreign investors, the official China Securities Journal reported on Wednesday, citing remarks by a senior official from the Ministry of Commerce at a conference.

Deputy bureau chief of the foreign trade department Huang Feng said the ministry had selected pilot regions in which to trial a new regulatory regime that will streamline paperwork and auditing processes for foreign companies.

The pilot areas will include the capital Beijing, the country’s financial center Shanghai, and the provinces of Jiangsu and Guangdong, the report said.

Foreign direct investment in China slowed in 2012 but then reversed the decline in the first quarter of 2013 as confidence improved.

China drew $38.3 billion in foreign direct investment in the first four months of 2013, up 1.21 percent from the same period in 2012.

However, economists are concerned that increasing labor costs, high energy prices, weak intellectual property rights and a regulatory environment that maintains many restrictions on foreign firms is discouraging them from investing in the world’s second-largest economy.

The newspaper also quoted Ministry of Commerce spokesman Yao Jian, who said that the decline of profitability of foreign companies in China was due to a changing economic environment and increased competitiveness of domestic firms.

Reporting by Pete Sweeney; Editing by Jacqueline Wong

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