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Guangdong woos overseas manufacturers with subsidies of up to 150 million yuan

The new policy is aimed at boosting China’s plummeting levels of foreign investment, which sank to a 30-year low last year.

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UPDATED: 13 May 2024, 2:51 pm

Foreign manufacturers that invest in selected cities in Guangdong province will be eligible for millions of yuan in grants under a new initiative from the provincial government that is due to last until 2027.

According to a document published last week by the Department of Commerce of Guangdong Province, foreign manufacturing firms in Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan and Zhongshan are eligible.

High-tech manufacturing companies will receive a grant that is equivalent to 3 percent of their amount of foreign investment, while other manufacturing and high-tech service firms are eligible for a grant that equates to 2 percent of theirs. Firms from other sectors can apply for grants equal to 1 percent of their investment.

The subsidies are capped at 50 million yuan (US$6.9 million) per year for high-tech and other manufacturing businesses, with a total maximum of 150 million yuan (US$21 million). Foreign capital investment must equal US$50 million or more. 

High-tech service firms, as well as those of other sectors, can expect up to 20 million yuan in subsidies per year, with a permissible total of 80 million yuan during the measure’s implementation. 

[See more: Guangdong’s foreign trade surged by over 9 percent in the last two months]

There are also sweeteners for foreign firms that invest in 15 other Guangdong cities, including Shantou, Meizhou, Huizhou and Jiangmen, if they reach a foreign investment threshold of US$10 million or above. 

One-time considerations of 10 million yuan are on offer to foreign companies setting up regional headquarters in Guangzhou, Shenzhen, Zhuhai, Foshan, Dongguan and Zhongshan and invest US10 million or more per year. Meanwhile, those that invest in 15 other Guangdong cities will receive a one-off incentive of 5 million yuan if their annual investment reaches US$5 million or more. 

Guangdong’s plan is part of a broader scheme spearheaded by the central government, which is aiming to shore up foreign capital in the country through more attractive policies and looser regulations. This comes as foreign direct investment rates continue to drop significantly in China, which reported its lowest level of foreign capital in 30 years in 2023. 

In March, the vice commerce minister of China, Guo Tingting, was quoted by CNBC as saying, “China will fully guarantee national treatment for foreign companies, so that more foreign companies can invest in China with confidence and peace of mind.” 

However, an American Chamber of Commerce in China report found that it was becoming more difficult for US companies to operate in China due to the rising tensions between the two countries, as well as other policy issues. 

UPDATED: 13 May 2024, 2:51 pm

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