China names and shames local governments for mistreating foreign investors
- China’s national audit office lists 45 local authorities for violations relating to levying unauthorised fees and delays in granting business licenses
- China is trying to attract increased overseas investment with some parties looking elsewhere due to the US-China trade war and increasing costs
China has publicly named and shamed dozens of its local governments for mistreating foreign businesses in the latest effort to woo overseas investment with the country’s role in the global value chain under threat from the trade war with the United States.
The National Audit Office said in its quarterly report that it had found 45 local authorities who had committed violations relating to levying unauthorised fees and delays in granting business licenses.
The Hunan provincial government, for example, continued to demand service charges from foreign businesses even after they had been officially removed by the central government in March 2016, collecting 4.77 million yuan (US$710,000) from 46 foreign companies as of the end of 2018.
Local authorities in the coal-rich province of Shanxi, Hunan and the autonomous regions of Inner Mongolia and Ningxia failed to complete foreign business registration within the required three working days.
Shanxi’s commerce department registered 101 foreign businesses between July to December 2018, with 21 completed outside the limit, the longest being 55 working days, the audit office found.
The quarterly audit is a broad review on whether local governments are implementing Beijing’s rules and policies covering poverty reduction, pollution control, financial risk management, reducing business costs and improving business environment. However, it is rare for Beijing’s audit office to name the local governments for mistreating foreign investors.