Charting China's Course: A Journey Towards Openness
In 2023, China witnessed a commendable growth in its Gross Domestic Product (GDP), achieving a 5.2% expansion for the year. This growth not only aligned with the government's annual target but also showcased a robust performance, especially in the fourth quarter, where the year-on-year GDP surged to 5.3%, surpassing the 4.9% recorded in the third quarter. Despite these positive indicators, the Chinese government is gearing up to provide additional support to its economy and trade in 2024.
In this EAC Executive Briefing, we will delve into the significant developments that unfolded in the latter half of 2023, some of which are expected to extend their impact into the new year.
July 2023: 24-point Plan
China set forth a comprehensive 24-point plan in July 2023, responding to the slowdown in foreign investments and geopolitical challenges. With a commitment to actively attract and efficiently utilize foreign investment, China aims to enhance its international standing.
The directives, categorized into six key areas, focus on leveraging domestic market advantages and establishing a top-tier business environment with market orientation and global competitiveness:
- Improving the Efficiency of Foreign Capital Utilization
- Ensuring Equal Treatment for Foreign-Invested Enterprises
- Consistently Enhancing the Safeguards for Foreign-Invested Enterprises
- Enhancing the Level of Investment and Operational Facilitation
- Strengthening Financial and Tax Support
- Improving the Methods of Promoting Foreign Investment
Each of the listed key areas also includes 3-5 additional detailed directives. EAC published a teaser explaining the 24-point Plan.
September 2023: Easing Cross-Border Data Flow Rules
In September 2023, the Cyberspace Administration of China (CAC) introduced draft provisions on regulating and promoting cross-border data flows. This move aims to alleviate compliance burdens for numerous foreign companies, particularly those in B2B industries with limited personal information. The exemptions cover various scenarios, including HR management, cases involving less than 10,000 individuals, and instances of contractual necessity. Notably, the draft rules maintain a security assessment requirement for the transfer of "important data" identified by relevant authorities.
Key exemptions include:
- Necessary personal information of internal employees
- Personal information of less than 10,000 individuals in one year
- Personal information to fulfill contractual obligations, such as cross-border shopping, remittances, and reservations
January 2024: Visa Easing
China, having lifted strict border controls related to its "zero-Covid" policy, implemented new rules on January 11, 2024, through the National Immigration Administration (NIA). These changes aim to address concerns about the slow return of overseas tourists affecting China's attractiveness to investors. The key modifications include:
- Relaxed requirements for foreigners applying for port visas
- Exemption from border inspection procedures for foreign nationals on 24 hours direct transit at 9 airports
- Streamlined processes for visa extension and renewal
- Provision of re-entry visas for frequent travelers
- Simplified document submission for China visa applications
The Chinese Academy of Sciences (CAS), one of China’s leading think tanks, anticipates the stabilization of the world's second-largest economy in 2024. While driven by domestic consumption and investment, a slight drag from exports is expected in the first quarter, resulting in a modest 5% growth rate, with a faster expansion anticipated later in 2024.