Today, China is the second-largest economy of the world, the largest manufacturing country and a strong force in the world’s resource industry. With extensive infrastructure development programs and industrialization and the total population of 1.386 billion, China takes the lead over other countries in the overall consumption of minerals and metals. Research shows that about 40% of resources mined all over the world end up in the People’s Republic of China.
The Chinese market was opened to private investors a few decades ago which eventually helped to modernize the mining industry of the nation. Now, China is recognized as one of the top producers of over 20 of the most significant resources including gold, coal and other rare earths. The extensive and diverse mineral reserves of China consist of a major portion of worldwide reserves for titanium, tungsten, molybdenum and other rare earths.
The consumption of minerals in the country is expected to be quite large. Many minerals like iron ore will soon climb beyond the maximum consumption point.
The Mining Sector Welcomes Foreign Investment
Because of the reform and open-door policy introduced in 1978, the nation has attracted many foreign investors. The figures show that $1.7 trillion have been recorded in just foreign investment since 1978.
Foreign investment was first allowed by China in mining and resource exploration in the year 1993. In 1997, the “Mineral Resources Law” was revised which further opened doors for foreign firms to establish new joint ventures with companies of China that had exploration licenses. The straightforward and transparent permitting process of China is a big plus for all foreign investors. After the requisite geographical reports have been completed, Sino-foreign equity joint venture firms can get exploration permits.
Survey shows that China is the best mining jurisdiction in the whole Asia. Taxation regime of China on projects of mining compares well with few of the top jurisdictions of the world. The government requires companies to pay a 3% resource tax to them as loyalty along with 25% income tax and 17% VAT on the sale of concentrates. Out of 104 mining jurisdiction throughout the world, China ranked 54th in 2016.
The political risk of a mining jurisdiction is a major factor in evaluating its attractiveness for investors. Investors have historically feared the geopolitical climate of China and have remained skeptical of investing in the country. However, since China opened doors for foreign investments, there hasn’t been any incidence of foreign assets being expropriated in China. Furthermore, it is expected that the business environment of China will eventually become more favorable for investors as the China’s economy develops.
Primary Keyword: Investment
Secondary Keyword: China