Chart of the Day: Local Governments’ Problematic Treatment of Foreign Investors

For a while now, China has been saying it embraces foreign investment, yet some local governments haven’t walked Beijing’s talk.

Local authorities in 45 areas were found to have treated overseas-funded firms poorly in recent years, according to a quarterly report (link in Chinese) released by the National Audit Office earlier this month.

The central province of Hunan stood out. From 2016 to 2018, authorities in 25 city- and county-level governments illegally charged overseas firms 4.8 million yuan ($699,938) in total for reviewing their construction drawings despite a provincial ban on such charges, according to the report. Other provincial-level regions such as Shanxi, Inner Mongolia and Ningxia were also called out for their misconduct.

Local bureaucracy or corruption generally offsets the effect of Beijing’s policies for foreign investment and thus hurts foreign companies doing businesses in China.

The audit report also highlighted cases where local governments had harmed domestic companies’ interests.

Contact reporter Lin Jinbing (jinbinglin@caixin.com)