Latest trends shaping the Chinese economy
China, a county with a huge economy of $10 trillion that is growing at a fast pace of 7%, is a force that will shape the global economy in many ways. For about three decades, the country has set off on a route to open its market to the global economy, and everyone wants to join. You, too, can incorporate your company in China to grow your enterprise not just within its borders, but globally too.
Before you can get started, it is very important to start by understanding the Chinese market well. For example, do you invest in the tourism industry, manufacturing, or import & export niche? In this post, we will look at the latest trends that are shaping the Chinese economy to help you make the right decision:
Government policy is a crucial force in shaping the business landscape
The Chinese government is the primary factor in defining the success of its economy. As a foreign investor, it is important to look at the areas being given more focus and target them to enjoy related benefits, such as low taxes and subsidies.
One of the areas that demonstrate this commitment by the government is the Ministry of Commerce Foreign Investment Catalog that classifies the areas you can invest in.
As mentioned by Hawksford The encouraged areas are the parts of the economy that the government wants to attract more investors in. They are mainly in research & development and manufacturing. If your business is in these areas, it gets to enjoy lower taxes, simplified approval procedures, and cheaper land costs. If you want to invest in restricted areas, such as education, the Chinese administration requires that you work with a Chinese partner.
Free trade areas are at the heart of spurring growth in the country
For most investors coming to China, some of the concerns are how to get all the required facilities and favorable taxes. This is why the government has been developing free trade areas, and they have become a huge attraction. The first free trade zone was established in Shanghai in 2013, and the benefits it generated made the government grow the number to 11 by early 2021.
If you are considering opening a company in China, some of the benefits of locating it in a free trade zone include:
- Duty-free import and warehouse storage.
- Custom procedures are very simplified.
- Foreign exchange controls are relaxed.
- The company set up procedure is simplified.
- Possibility of getting tax discounts.
Note that although you can use any free trade zone for your business, it is a good idea to check for the one that deals with products such as what you are dealing with. For example, the Shenzhen Free Trade Zone is known for logistics and IT industries, while Guangzhou Nansha Free Trade Zone area is a hub for finance and high-end manufacturing.
A shared prosperity
Unlike in the past, it appears that China is working on a new level where its government is appreciating the need for economic cooperation at the international level. This is part of the reason why the economy has been performing very well, especially in the last ten years. In November 2020, China, together with other 14 Asia-Pacific nations, entered into a Regional Comprehensive Economic Partnership, which has the potential to become the largest trading bloc on the globe.
A month later, in December 2020, China went ahead and completed investment agreement negotiations with the EU. These agreements are at the heart of making it easy for Companies based in China to access a bigger market. Therefore, opening a business in China is becoming even more attractive because you will be able to easily access the rest of the Asia and European markets.
If you want to take your business to the next level, do not hesitate to incorporate it in China. The country is overflowing with potential, and no matter the industry of interest, from hospitality to manufacturing, the country does not disappoint.
