Beijing Commits to Loosening of Foreign Investment Restrictions

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China’s Ministry of Commerce (MOFCOM) plans on easing nationwide foreign investment restrictions by following the lead of the negative list system first trialled across the country’s 11 free trade zones.

MOFCOM spokesperson Gao Feng said at a press conference held on 2 November that the ministry would work with relevant central government departments to implement the negative list administrative system on a nationwide basis “as soon as possible”

The negative list system applied in China’s free trade zones since 2013 involves the provision of a list of sectors in which foreign investment is restricted and requires a permit, while allowing foreign investors to receive equal treatment with domestic companies for any sectors that are not included in the list.

Earlier this year in June the State Council issued a new foreign investment negative list that covers 15 sectors including commercial services, financing, leasing, manufacturing, mining, retail and wholesale, including 40 categories and 95 special management measures.

The new list contained 10 fewer categories and 27 fewer measures compared to its 2015 predecessor, facilitating investment in areas including banking services, aviation manufacturing, education and waterway transportation.

According to Gao Feng the negative list system had succeeded in reducing the time required to establish foreign invested enterprises in FTZ’s to just three days from one month previously, by enabling investors to better and more conveniently understand investment conditions and requirements.

Gao pointed out that the 19th National CCP Congress made reference to the comprehensive implementation of the negative list system as a fundamental reform of China’s foreign investment administrative system, and an important move for expanding China’s overseas openness as well as its active use of foreign capital.

“We will actively cooperate with other departments to implement the negative list administrative system on a nation-wide basis, further strengthening the openness, transparency and standardisation of the investment environment,” said Gao.

According to Gao MOFCOM has already submitted a new foreign investment law to the State Council based on opinions solicited from various spheres of society, and will continue to actively cooperate with other central government agencies to perform relevant legislative discussion work.

“[We] hope to use the drafting and release of the new foreign investment law as a new foundational law for foreign investment; reform China’s foreign investment administrative system, comprehensively implement the negative list system, pragmatically protect the lawful rights and interests of foreign investors, expedite fair competition, and create a more stable, transparent and rule-of-law based commercial operating environment.”

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