I remember last year when everyone talked about the possibility of the country relaxing foreign investment restrictions in the later stage, their attitude was quite conservative, especially when it came to the prediction of relaxing foreign investment restrictions in the steel industry. At that time, they always felt that due to the involvement of too many interests, such policies would not be introduced too soon. However, on the 4th, the National Development and Reform Commission of China released the revised draft of the "Catalogue of Industries for Guiding Foreign Investment" and publicly solicited opinions from the society. It seems that the policy of significantly reducing restrictions on foreign investment and relaxing access is just around the corner.
According to the relevant person in charge of the National Development and Reform Commission on the 4th, the revision of the Industrial Guidance Catalogue for Foreign Investment is the largest in terms of reducing restrictions on foreign investment and expanding opening up. Compared with the current catalog of 2011, the newly revised industrial guidance catalog has significantly reduced the number of restricted items from 79 to 35. And further relax the restrictions on foreign shareholding ratios; Joint venture and cooperation; The number of entries has decreased from 43 to 11; Chinese controlling shareholder; The number of entries has also decreased from 44 to 32. The draft for soliciting opinions has lifted foreign investment restrictions in heavy chemical industries such as steel, ethylene, refining, papermaking, coal chemical equipment, automotive electronics, lifting machinery, power transmission and transformation equipment, as well as some pharmaceutical production fields. China plans to further relax foreign investment access, including the steel industry.
What impact will this policy of relaxing restrictions on foreign investment have on the steel market?
1. The shortage of funds in the steel industry may be alleviated
We know that as the steel industry goes downhill, the credit problem for steel traders is becoming increasingly serious. As an industry that has long been short of funds, incidents of steel traders running away or jumping off buildings occur from time to time every year. Relaxing foreign investment will help alleviate the financial pressure on the steel industry and is expected to drive the overall technological level of the industry to improve.
2. Beneficial for promoting industrial upgrading
The current situation of China's steel industry is evident to all, with overcapacity, outdated technology, dependence on imports for the high-end market, and an urgent need to upgrade the industrial structure& hellip; But it has always been plagued by a lack of funds and technology, and has been stuck in the status quo for a long time, unable to extricate itself. Relaxing restrictions on foreign investment and allowing foreign investment to enter can promote industrial structure upgrading through market competition. Introducing foreign investment can improve the technological content of the entire steel industry, intensify the elimination of backward industries, and reduce imports.
3. The steel industry may accelerate its reshuffle
Due to China's large demand for steel, the opening up of China's foreign investment policy may inadvertently attract many foreign enterprises to turn their attention to China, and stimulate the enthusiasm of foreign investment. This will greatly improve the introduction of advanced knowledge, technology, and experience from abroad in many fields, thereby promoting the development of China in these areas.
However, it should also be noted that the introduction of foreign companies not only enlivens the market atmosphere, but also strengthens the competitiveness of enterprises, achieves survival of the fittest, and adapts to the market
development. So, on the one hand, relaxing foreign investment may be beneficial for promoting the development of domestic steel enterprises, allowing them to invest more funds in technology research and development, as well as transformation and upgrading. On the other hand, due to the fact that more than one-third of China's steel enterprises are small and medium-sized private enterprises with weak competitiveness, under the dual pressure of increased environmental protection costs and foreign investment, the industry may accelerate its reshuffle, and the steel industry is no exception!
So, no matter what, relaxing the entry criteria for foreign investment will have a significant impact on the Chinese market in the later stage. From the perspective of the steel industry, the introduction of funds may alleviate the financial difficulties of the domestic steel industry, but on the other hand, the introduction of technology will also continuously upgrade the industrial structure of the steel industry, accelerating the speed of industry reshuffle, which should not be underestimated.