New negative list trims limits on foreign investors

China's 11 pilot free trade zones (FTZs) will adopt a "negative list" management approach for foreign investment starting on Monday.

China has this year significantly trimmed its negative list, which restricts foreign investment in its FTZs, the Xinhua News Agency reported on June 16.

According to a circular published at the State Council's website, the latest version of the negative list consists of 15 industry sectors, including mining, leasing, commercial services, manufacturing, wholesale, retail and insurance. Among the sectors, 40 sub-sectors and 95 special management measures are included. The revision reflects China's efforts to offer more opportunities to foreign investors.

For example, overseas investors can now design and produce civil helicopters with a maximum take-off weight of three tons and above in the FTZs, as well as manufacture and repair marine engineering equipment (including modules). Foreign investors are no longer obligated to enter into a joint venture when engaging in rail transport equipment or civilian satellite manufacturing, said the circular.

The negative list provides an outline of the sectors in which foreign investment is restrained and is applicable to China's free trade zones.

The 2017 negative list has further clarified the requirements of investors' background, earning ability and stock proportion for foreign companies to participate in China's banking and insurance industries to raise transparency and competitiveness in China's FTZs, added the circular.

Compared with the 2015 list, it cuts 10 categories and 27 measures concerning such fields as aviation manufacturing, waterway transportation, banking services and education.

According to the State Council's circular, fields not covered by the negative list, including public culture and government purchases, should follow existing regulations.

For the non-prohibited investment sectors on the list, a foreign investment permit is necessary, said the circular. For all industries not listed in the document, foreign investors will receive equal treatment to domestic companies in China's free trade zones.

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 ($101 billion). The experience gained in Shanghai has been applied to three other FTZs including South China's Guangdong Province. As a result, 12,712 foreign-funded companies had been set up, attracting foreign investment worth 1,13 trillion yuan ($166 billion), according to the statistics from the Ministry of Commerce.

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 Xinhua reported.