China to Slash Limits on Foreign Investment to Revive Spending

(Bloomberg) -- China will further open its economic borders to investors from abroad in a move intended to counter sliding confidence in the outlook for the world’s second-largest economy.

The nation will continue opening its education, finance, culture and manufacturing sectors to foreign investors, the vice minister of commerce Wang Shouwen said at a briefing in Beijing on Tuesday. Measures will focus on boosting investment in inland, western regions, Wang said.

Foreign capital utilized by the country declined by 1.6 percent in July. While global investors fueled China’s economic boom by building factories, shops and infrastructure in the nation since 1978, some lucrative service sectors such as finance and telecommunications are largely closed to them.

China also is considering using a nationwide “negative list” to relax those regulations, which means only industries listed are closed to investors from overseas. The negative list is now applied only in free-trade zones, while other areas can limit all sectors that aren’t specifically cleared.

As foreign investment growth in China has slowed, the nation’s outbound investment has surged. Chinese investment overseas is mainly through mergers and acquisitions, Wang said.

To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at xpi1@bloomberg.net, Miao Han in Beijing at mhan22@bloomberg.net. To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Ken Wills, Jodi Schneider

With assistance from Xiaoqing Pi, Miao Han