For the purpose of deepening overall reform and further opening-up, China has recently updated “Circular of the General Office of the State Council on Issuing the Special Administrative Measures (“the Negative List”) for Foreign Investment Access to Pilot Free Trade Zones to Version Year 2017. The new negative list will be applicable to foreign investment in the country’s 11 free trade zones and will come into force on 10th July 2017. The new negative list cut 27 restrictions across eight sectors including mining, manufacturing, and finance as follows.
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Category |
Industry |
Amendment |
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Mining industry |
Metal and non-metal ore mining and beneficiation |
Restricted investment in the prospecting and mining of precious metal (gold, silver and platinum family). |
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Restricted investment in the mining and beneficiation of lithium mineral. |
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Manufacturing industry |
Aeronautical manufacturing |
Investment in the design and manufacturing of civil helicopter with a capacity of 3 T or above must be controlled by Chinese party. |
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Shipbuilding |
Investment in the manufacturing of low and medium-speed diesel engine and bent axle of ship shall be controlled by Chinese party. |
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Investment in the manufacturing and repair of marine engineering equipment (including module) must be controlled by Chinese party. |
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Automobile manufacturing |
New all-electric battery passenger vehicle manufacturing enterprises must have their own product brands and proprietary intellectual property rights as well as authorized relevant patents for invention. |
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Railway transportation equipment manufacturing |
Investment in the manufacturing of railway transportation equipment must be subject to joint venture or cooperative operation (except for the research, development, design and manufacturing of passenger service facilities and equipment matched with high-speed railway, railway passenger dedicated line and inter-urban railway; research, development, design and manufacturing of rail and bridge equipment relating to high-speed railway, railway passenger dedicated line and inter-urban railway, the manufacturing of electrified railway applications and equipment and the manufacturing of sewerage equipment for passenger railway coaches). |
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Manufacturing industry |
Railway transportation equipment manufacturing |
The domestication rate of urban rail transit project equipment must reach 70% or above. |
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Communication equipment manufacturing |
Investment in the design and manufacturing of civil satellites and manufacturing of effective load of civil satellites shall be controlled by Chinese party. |
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Smelting and pressing processing of mineral products |
Restricted investment in the smelting of rare metals such as molybdenum, tin (excluding tin compounds) and antimony (including antimony oxide and antimony sulfide). |
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Pharmaceutical manufacturing |
Prohibited investment in the processing of traditional Chinese medicinal materials listed in the Regulations on the Protection of Wild Medicinal Resources and the Directory of China's Rare and Endangered Plants. |
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Transportation industry |
Road transportation |
Restricted investment in highway passenger transportation companies. |
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Water transportation |
Restricted investment in ocean shipping tally business, limited to joint venture and cooperative operation. |
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Information technology services |
Internet and related services |
Prohibited investment in the business places of internet access services. |
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Finance Industry |
Banking |
Te branches of the foreign bank shall not engage in certain business as stipulated by the Law of the People's Republic of China on Commercial Banks, including "issuing, cashing and undertaking the sale of government bonds as agents". |
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The foreign bank that is permitted to operate the RMB business must meet the minimum requirements on the opening time. |
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The foreign investors investing in the financial asset management companies shall meet the requirements on their total assets |
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Security |
A foreign-funded insurance company shall not engage in the business of ceding in or out the reinsurance with its affiliated enterprises in case of absence of an approval from the Chinese insurance regulatory authorities. |
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Business services |
Accounting audit |
The Principal Partner of an accounting firm (special general partnership) (or top management members) shall have the Chinese nationality. |
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Statistical investigation |
Implement the qualification certification system for foreign-related investigation institutions and the system of examination and approval for foreign-related social survey projects. |
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Restricted investment in ratings services. |
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Other commercial services |
The legal representative of an intermediary agency for entry and exit for personal reasons must be a Chinese citizen having a permanent residence in China and being of full capacity for civil conduct. |
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Education |
Education |
It shall not establish the institutions offering education in special fields such as military, police, politics and the Party school. |
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Culture, Sports and entertainment |
Press and publishing, radio, film and television, and financial information |
Prohibited engagement in the import of artworks and digital bibliographic database and its publications as well as other cultural products (excluding the contents of the abovementioned services that are permitted under China's WTO accession commitments). |
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Culture and entertainment |
The restricted investment in the performance brokerage institutions must be controlled by Chinese party (excluding those providing services for the provinces where they the Free Trade Zone are located). |
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Restricted investment in the construction and operation of large theme parks. |
In 2013, there were 190 items on the list. This was reduced to 139 in 2014, and to 122 in the previous 2015 update. The new negative list now stands at 95 items.
It is calculated by the end of April, 8,734 foreign-funded companies had been set up in the Shanghai FTZ and contracted foreign investment had reached 688 billion yuan. With the further shortening the negative list, China government believes it will attract more foreign investors.
If you have any questions, please send the email to me.
Ms. Jojo Hu
TEL: 0086-21-68868335 ext 324 / FAX: 0086-21-68868021
Email: jojohu@shanghaiinvest.com