MOFCOM Highlights IPR Campaign, NDRC Emphasizes Reforms of Key Areas of Foreign Trade and Investment

Transforming China’s industrial structure, encouraging services outsourcing, and protecting intellectual property rights are among the most important macroeconomic priorities for 2012, according to announcements from the PRC National Development and Reform Commission (NDRC) and Ministry of Commerce (MOFCOM). The two agencies released their annual work plans, which disclose their goals for the year and the actions they plan to take to accomplish those goals. Companies may want to consider how to communicate their own strategic plans to various government agencies in light of these priorities.

MOFCOM’s 2012 priorities
A common theme throughout MOFCOM’s 2012 priorities is an emphasis on more balanced development, whether between regions, imports and exports, or goods and services. Compared with MOFCOM’s 2011 priorities,  MOFCOM’s 2012 plan elaborates on several new points, such as combating intellectual property rights (IPR) infringement and promoting onshore services outsourcing, while re-emphasizing existing priorities, including encouraging building domestic brands and optimizing the geographic layout of industries.

• Combating IPR infringement  Following the conclusion of the central government’s special IPR campaign to combat IPR infringement,  the State Council announced the formation of a special interagency group to combat IPR infringement and counterfeiting. With the day-to-day working office housed in MOFCOM, the inclusion of IPR protection activities among MOFCOM’s main priorities for 2012 is a welcome signal that the interagency group will take more decisive action this year.
• Encouraging services outsourcing  MOFCOM aims to encourage large-scale enterprises and institutions to use professional services outsourcing companies and organizations.
• Optimizing the geographic layout of industries and improving foreign investment management  Since most foreign direct investment takes place on China’s coast, MOFCOM is encouraging foreign-invested industries to relocate to Central and Western China. MOFCOM plans to revise the Catalogue of Encouraged Industries for Foreign Investment in Central and Western China and promote exchange and cooperation between the coastal region and central and western regions. The agency also aims to enhance and improve services for foreign investment by promoting online licensing approvals and revising regulations on wholly foreign-owned enterprises and joint ventures.
• Encouraging building domestic brands and expanding consumption in services  Similar to the 2011 work plan, increasing consumption is the agency’s top priority. As part of its plans to increase domestic consumption, the agency plans to promote the building of domestic brands, improve urban and rural distribution networks, expand consumption in services industries, and guide development of e-commerce.
• Balancing imports and exports  Upgrading China’s foreign trade structure and promoting a balance of exports and imports remains a main priority in 2012. In addition, MOFCOM will prioritize providing preferential tax and financial policies in order to grow small and medium-sized foreign trade companies, optimizing structure of exports and imports in the coastal region, supporting increased trade in central and western regions, and urging the United States and Europe to allow more high-tech exports to China.

NDRC’s 2012 priorities
NDRC’s 2012 priorities have changed little from the prior year. However, there are three important changes:

• NDRC will encourage mergers and acquisitions across industries and regions, draft new policies for revitalizing the economy in the northeast, release detailed opinions on promoting the rise of Central China, and implement the 12th Five-Year Plan (FYP, 2011-15) for development of Western China.
• In a change from previous years, NDRC’s 2012 work priorities list managing foreign investment as a separate priority, perhaps signifying that the agency will pay particular attention to new foreign investment. In addition, the list mentions implementing the newly revised Catalogue Guiding Foreign Investment.
• The agency also aims to enact further reforms in critical economic areas such as healthcare, energy, and regional development. To accomplish these goals, the agency will conduct trials of tiered pricing for electricity, release and implement a 12th FYP on healthcare reform, establish a trading mechanism for major pollutant discharge, release the Catalogue of Encouraged Industries for Foreign Investment in Central and Western China, and enhance investment cooperation with key countries and regions.

Other central government agencies will release 2012 work plans soon and the US-China Business Council will report on these priorities as they are released.