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China Releases Negative Lists and Catalogue of Encouraged Industries for Foreign Investments (2019 Revisions)

2019-07-018344

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China Releases Negative Lists and Catalogue of Encouraged Industries for Foreign Investments (2019 Revisions)

Foreign Investment Law Series 5



The Special Administrative Measures (Negative List) for Foreign Investments Access (2019 Revision)


On June 30, 2019, National Development and Reform Commission and Ministry of Commerce jointly released Decree [2019] No. 25, the Special Administrative Measures (Negative List) for Foreign Investments Access (2019 Revision) (the “2019 Negative List”). The 2019 Negative List will be implemented from July 30, 2019, replacing the Special Administrative Measures (Negative List) for Foreign Investments Access (2018 Revision) (the “Former Negative List”), which was released by National Development and Reform Commission and Ministry of Commerce on June 28, 2018.

 

The 2019 Negative list, while preserving the basic structure and formality of the Former Negative List, features a more concise catalogue, a further shortened list, and a series of opening measures, as the 2019 Negative List has its list of items reduced to 40 from the original 48, a 16.7% reduction. Major changes are specified below:


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Special Administrative Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones (2019 Revision)


Meanwhile, after announcing on establishing more Pilot Free Trade Zones, National Development and Reform Commission and Ministry of Commerce jointly released Decree [2019] No. 26, the Special Administrative Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones (2019 Revision) (the “2019 Negative List in Pilot Free Trade Zones”), replacing the Special Administrative Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones (2018 Revision) (the “Former Negative List in Pilot Free Trade Zones”).

 

2019 Negative List in Pilot Free Trade Zones has its list of items reduced to 37 from the original 45, a 17.8% reduction. Major changes are specified in the chart below (changes reflected in the 2019 Negative List will not be listed)


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Catalogue of Encouraged Industries for Foreign Investment (2019 Revision)


At the same day, National Development and Reform Commission and Ministry of Commerce jointly released Decree [2019] No. 27, the Catalogue of Encouraged Industries for Foreign Investment (2019 Revision) (the “2019 Catalogue”). The 2019 Catalogue will be implemented from July 30, 2019, replacing the Catalogue of Industries for Guiding Foreign Investment (2017 Revision) and the Catalogue of Priority Industries for Foreign Investment in Central and Western China (2017 Revision), which was released by National Development and Reform Commission and Ministry of Commerce respectively on June 28, 2017 and February 17, 2017.

 

The 2019 Catalogue is divided into two parts, namely the Nationwide Catalogue of Encouraged Industries for Foreign Investment and the Catalogue of Priority Industries for Foreign Investment in Central and Western China. The Nationwide Catalogue of Encouraged Industries for Foreign Investment lists a total of 415 industry sectors that encourage foreign investments; the Catalogue of Priority Industries for Foreign Investment in Central and Western China lists industry sectors that each province and city wish to introduce.



 MHP Comments 


According to the above lists and catalogue, we believe it is clear that:

 

(1) China is pushing for opening measures towards foreign investment across all industries--service, manufacturing, mining, agriculture, etc. Foreign holding companies and wholly foreign-owned companies are permitted in more industry sectors.

 

(2) No further restriction is reflected in the 2019 Negative List. The 2019 Negative List confirmedly achieves “less restriction only”.

 

(3) As the 2019 Negative List highlights the underlying investment promotion principle of Foreign Investment Law, the implementation of Foreign Investment Law will be facilitated. It is reasonable to believe that, following the implementation of the 2019 Negative List, China will introduce more foreign investment policies to further encourage and protect foreign investments.


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