Foreign investment will be given wider access to China's
fast-growing aviation market, according to an amended industry
regulation to be put into effect Thursday.
Foreign companies will be allowed to invest in all domestic
airlines following the institution of the new regulation, and their
shareholding limitation will be lifted to 49 percent from the 35
percent in effect at the moment.
The limitation is to be lifted further in airport investment. The
new regulation modifies the 49 percent shareholding cap for foreign
investment to a vague description, saying that Chinese companies
must hold relatively major shares in such cooperative
investments.
The new foreign investment regulation was co-drafted by the General
Administration of Civil Aviation of China (CAAC), the State
Development Planning Commission, and the Ministry of
Foreign Trade and Economic Cooperation, and has been approved
by the State Council.
It
will displace the former regulation, which has been in effect since
1994.
Investment mechanisms are varied in the new scheme. Besides the
former mode of joint ventures, foreign companies can also obtain
their shares through buying stocks and other authorized means of
investment.
The general aviation market is also being opened wider to foreign
companies. Except for some sensitive fields that might involve
China's defense security, most air services will be open to foreign
investors.
The regulation states for the first time that officials from
foreign companies investing in the field can also act as presidents
or general managers of the companies or airlines they invest
in.
CAAC, China's aviation industry watchdog, stated that the
modifications coincide with China's opening-up process, especially
the expansion of market demand after China's entry to the World
Trade Organization.
Yang Guoqing, vice-minister of CAAC, said the new investment
regulation is good news to foreign investors.
"Foreign companies will have the chance to share in the fast
development of one of the world's biggest aviation markets," Yang
said.
Under the former regulation, only a few Chinese airlines were open
to foreign investors, and the share-holding limitation was
strict.
Yang said CAAC took suggestions from domestic airlines into
consideration when drafting the new policy, and agreed that
extensive foreign investment could help push the development of
China's aviation industry.
"The larger shareholding percentage of foreign players will
stimulate foreign investors to inject advanced management and
mature business models into their ventures with Chinese partners,"
Yang said, adding that their experience would push domestic
airlines to cut operation costs and improve efficiency.
Xu
Donghua, a researcher with the Development Research
Center of the State Council, said the new regulation was a big
step toward the opening up of China's aviation market.
"There are no countries in the world allowing foreign companies to
hold all the shares in domestic airports, so China's airport
investment structure, following the new regulation, is reasonable,"
Xu said.
Domestic airlines carried 74.5 million passengers last year, with
the business expansion rate reaching 9.6 percent.
"It's roughly two times that of the world average development rate
of the industry, so I am optimistic about foreign investors'
enthusiasm," Xu said.
(China
Daily July 31, 2002)