Local governments get more say in approvals

CHINA has eased rules for foreign investments by allowing local governments to approve the setup of foreign-funded ventures amid a slowdown in capital inflows.

The local governments are now authorized to allow foreign investors to operate or invest in sectors that China encourages to develop, the Ministry of Commerce said on its Website yesterday.

Foreign investors can also seek approval from local commerce authorities instead of the ministry to merge with local firms if the value of the acquisition deal is less than US$100 million, according to the new rule.

However, foreign investors still require approval from the ministry if they plan to invest in companies listed on the Chinese mainland.

The ministry also gave local governments authority to approve foreign-funded auto makers to increase investments to expand production of new models and increase capacity as well as setting up vehicle parts ventures.

The local authorities can also approve foreign investors to set up holding companies with as much as US$100 million in registered capital, the ministry said in a separate statement.

The simplified rules were introduced after foreign investments slowed in China. Foreign direct investments tumbled 32.7 percent to US$7.54 billion in January on an annual basis, the fourth straight monthly decline, as firms trimmed spending amid the global financial turmoil.