China: China's 2019 Negative Lists And Encouraged Catalogue For Foreign Investment

Last Updated: 15 July 2019
Article by Zoey Zhang

The 2019 editions of China's National and FTZ Negative Lists and FI Encouraged Catalogue are important supplements to the upcoming Foreign Investment Law.

China Briefing explains the new changes and identifies the industries where China restricts or encourages foreign investments.

On June 30, 2019, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOF) jointly issued two "negative lists" and one "encouraged catalogue", all three of which will take effect on July 30, 2019.

The two Negative Lists refer to the Special Administrative Measures on Access to Foreign Investment (2019 edition) ("2019 FI National Negative List") (full list in Chinese available here) and the Free Trade Zone Special Administrative Measures on Access to Foreign Investment (2019 edition) ("2019 FI FTZ Negative list") (full list in Chinese available here), which will replace their respective 2018 versions.

These two negative lists enumerate the industries where foreign investment will either be prohibited or restricted.

The respective lists will be applicable in different areas – the FTZ list is for pilot free trade zones and the national list is for the rest of the country.

Besides the lists, the new Encouraged Catalogue, or the Catalogue of Encouraged Industries for Foreign Investment (2019 edition) ("2019 FI Encouraged Catalogue") (full list in Chinese available here), lists industries where foreign knowhow and investment is welcome.

The 2019 FI Encouraged Catalogue will replace the 2017 editions of the "encouraged category" of the Catalogue of Industries for Foreign Investment and the Catalogue of Encouraged Industries in the Central and Western Region.

The newly released lists and catalogue will assist foreign investors when evaluating investments or market entry into China as they can assess whether their business will be permitted and can enjoy preferential policies from the government.

Overall, the 2019 FI negative lists have been shortened, while the encouraged catalogue has been extended.

Simply put, there are fewer sectors where foreign investment will be restricted and more sectors where it will be encouraged. This bodes well for further market openings in China.

Major changes to the negative lists

Compared with the 2018 version, the number of items on the 2019 FI negative lists has reduced from 48 to 40 in the national list, and 45 to 37 in the FTZ list. No new item has been added.

The 2019 FI national negative list further opens up the services, agriculture, mining, and manufacturing sectors.

New opening-up measures will allow majority foreign ownership or wholly owned foreign enterprises in sub-sectors, such as the exploration and development of oil and natural gas, production and supply of heat and gas, value-added telecommunications, shipping business, manufacturing of Xuan paper and ink ingot, exploitation of wildlife resources, and operation of cinemas, as the table shown blow.

Similar changes can also be seen in the FTZ list, although this list is less restrictive.

The FTZ negative list further opens up another two industries – the fishing industry (by lifting the ban on investment in fishing products within China's territory) and the printing industry (by removing restrictions on ownership of press publications).

For industries not included in the negative list, foreign and domestic investors shall enjoy equal access under the law, save for record-filing requirements.

No region or department may impose separate restrictions on foreign investment in areas not on the negative list.

As over the last several years, both the national list and FTZ list have been greatly reduced – the number of items in the national list fell from 180 in 2011 to 40 in 2019 and items on the FTZ list fell from 190 in 2013 to 37 in 2019.

This shows that China is opening more industries to foreign investment.

Major changes introduced in the new encouraged catalogue

The 2019 FI Encouraged Catalogue consists of two sub-catalogues – one applies to the whole country and one is applicable to 22 provinces in China's central, western, and northeastern regions ("FI Encouraged Catalogue in the Central and Western Region").

Nationwide, the number of encouraged industries has increased from 348 to 415, with 67 items added and 45 items revised, compared with 2017.

Sectors such as modern agriculture, advanced manufacturing, high and new technology, energy conservation and environmental protection, and the modern service industry especially welcome foreign investment.

Among them, investments in manufacturing industries are encouraged, which account for 80 percent of the added or modified items. The high-end manufacturing, smart manufacturing, and green manufacturing industries are highly valued.

Region-wise, in the sub-catalogue of China's 22 provinces, encouraged items have been increased from 639 to 693, with 54 items added and 165 items revised, compared with 2017.

Foreign investors are more encouraged to transfer their investment to the central and western regions, such as Anhui, Hunan, Sichuan, Henan, Yunnan provinces, and Inner Mongolia.

Foreign-funded projects that fall under the encouraged catalogue will be eligible for preferential treatment, such as tax incentives, streamlined approval procedures, and discounted land prices.

How to use the negative lists and encouraged catalogue

To be noted, foreign investors investing in China are regulated not only by the negative lists addressing foreign investment access, but also by other negative lists applicable to domestic enterprises.

For example, the Negative List for Market Access (2018 edition) ("2018 MA Negative List"), which categorizes "prohibited" and "restricted" industries for all foreign and domestic investment – is another list foreign investors must check.

Moreover, foreign investors should also be aware that for some industries on the negative lists or even the encouraged catalogue, there may still be a set of examination and approval conditions and procedures that companies need to secure from relevant authorities. Seeking local expertise is advised.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions