On June 28, the National Development and Reform Commission (NDRC) and the Ministry of Commerce updated the negative list for nationwide foreign investment and on June 30 specifically for the country's free trade zones.
Compared with previous versions, the 2018 negative lists are different in three regards. First, they are much shorter. The national negative list cut 15 of the 63 restriction categories from the 2017 version, reducing the number of foreign investment projects subject to government approval. Second, market access conditions have been relaxed considerably. The new lists proposed 22 measures for opening up the finance, transportation, logistics, professional services, manufacturing, infrastructure, energy, natural resources and agriculture sectors. Third, the new version makes the opening up of China's economy more predictable. Unlike previous versions, the 2018 negative lists have revealed measures for the coming years, including timetables for the opening up of the automobile and financial sectors.
China has accelerated its opening up in recent years, reducing the number of restriction categories for foreign investment by nearly two thirds and introducing the negative list approach for the approval of foreign investment. In addition, a number of measures have been undertaken to attract foreign investment and establish a better environment for investors. China is one of the top two most promising destinations in the world for foreign direct investment (FDI) and the second largest recipient of FDI, according to the World Investment Report by the UN Conference on Trade and Development.
The Chinese economy is ready to open further as the country's industrial environment, policies and legal system are improved.
The latest versions of the negative lists indicate that the service industry will be a key sector in this regard. The rule that caps foreign investment in Chinese commercial banks has been lifted; the 51-percent foreign ownership of brokerages, futures dealers and life insurance companies is now allowed, with the cap to be removed entirely by 2021. In the infrastructure sector, bans on foreign investment in main railway networks and power grids have been abolished, while in transport, limits on foreign investment in railway passenger transport companies, international maritime transport companies and international shipping agents have been removed. For the logistics sector, caps on foreign investment in gas stations as well as grain purchase and wholesale have been dropped, while in the culture sector, foreign investors are now allowed to establish venues providing Internet services.
The manufacturing industry has also been opened. Limits to foreign investment in the manufacturing of special and new energy vehicles have been removed, while those on the manufacturing of commercial vehicles and passenger cars will be lifted by 2020 and 2022 respectively. Controls on foreign investment in the design, manufacture and repair of ships have also been removed, and those for general purpose aircraft, helicopters, unmanned aerial vehicles and aerostats have been abolished.
Access to the agriculture, energy and resource sectors has also been eased. Caps on foreign investment in the seed production of crops other than wheat and corn have been removed as have those on the mining of special and scarce coal. In the resource sector, caps on foreign investment in graphite exploitation, rare earth smelting and separation, and tungsten smelting have been lifted.
The above measures indicate that the Chinese economy has become significantly more open, heralding the start of a new round of opening up. While the Chinese economy recently transitioned from a phase of high-speed growth to one of high-quality development, profound changes are taking place worldwide such as the surge of trade protectionism. Faced with these new circumstances, the Chinese Government is opening up with renewed vigor, aiming to promote reform, development and innovation by furthering economic globalization.
The NDRC said in a press release on June 28 that the Chinese Government believes the new opening up measures will further intensify investment cooperation between China and other countries and regions, and facilitate exchange in capital, technology, management expertise and talent, realizing mutual benefit in a broader sense. This initiative to further opening up will benefit both China and the world.
The Chinese Government remains both determined and confident about further opening up. The 2018 versions of the negative lists represent the implementation of the leadership's decision in this regard, and they also demonstrate that the door to the Chinese market will not be closed, but opened wider still.
Copyedited by Laurence Coulton
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