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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Global | Publication | July 2019
While trade tensions among various countries continue to cast dark clouds over the global economy, the Chinese government has been demonstrating to the world its firm resolution to accelerate the opening-up of its economy to foreign investment.
At the 14th G20 Summit in Osaka on June 28, 2019, Chinese President Xi Jinping reiterated China’s commitment to open up to foreign investment.There, President Xi disclosed that China will be releasing the 2019 edition of the negative lists on foreign investment, which willfocus on sectors of agriculture, mining, manufacturing and services.
Two days after President Xi’s announcement, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) jointly promulgated the 2019 edition of the Special Management Measures for the Market Entry of Foreign Investment (Negative List) (《外商投资准入特别管理措施(负面清单) (2019年版)》) (the New National Negative List) and the 2019 edition of the Special Management Measures for the Market Entry of Foreign Investment in Pilot Free Trade Zones (Negative List) (《自由贸易试验区外商投资准入特别管理措施 (负面清单) (2019年版)》) (the New FTZ Negative List, together with the New National Negative List, the New Negative Lists), both of which will come into effect on 30 July 2019. Compared to the legacy Foreign Investment Industrial Guidance Catalogue (《外商投资产业指导目录》) which was updated every 2-4 years, the New National Negative Lists has been updated annually since it was first introduced in 2017.
Since 2018, the New Negative Lists have further reduced the scope of industrial sectors in which foreign investment is subject to restrictive or prohibitive measures. Each of the New Negative Lists cuts eight items from the 2018 editionand currently contains only 40 restrictive or prohibitive measures. TheNew FTZ Negative List retains 37 restrictive or prohibitive measures.
The industrial sectors which are newly opened up for foreign investment under the New Negative Lists are summarised as follows:
Industrial Sector | Item | New National Negative List | New FTZ Negative List |
---|---|---|---|
Cultural and entertainment | Construction and operation of cinemas | Elimination of the Chinese majority shareholding requirement | Elimination of the Chinese majority shareholding requirement |
Performance brokerage agencies | Elimination of the Chinese majority shareholding requirement | N/A (The 2018 edition had already effected such elimination.) | |
Public utilities | Construction and operation of urban gas and heat pipelines and networks for cities with a population of 500,000 or more | Elimination of the Chinese majority shareholding requirement |
Elimination of the Chinese majority shareholding requirement |
Transportation | Domestic shipping agencies | Elimination of the Chinese majority shareholding requirement |
Elimination of the Chinese majority shareholding requirement |
Value-added telecommunication |
Domestic multi-party communications, storage and retransmission and call centres | Elimination of the foreign shareholding cap of 50 per cent |
Elimination of the foreign shareholding cap of 50 per cent |
Manufacturing | Rice paper and ink ingot production | Elimination of prohibition on foreign investment | Elimination of prohibition on foreign investment |
Printing of publications | Chinese majority shareholding requirement is still applicable. | Elimination of the Chinese majority shareholding requirement | |
Environment | Development of wild animal and plant resources that are originated from and protected by China | Elimination of prohibition on foreign investment | Elimination of prohibition on foreign investment |
Agriculture and fishing | Fishing of the aquatic products in the sea and inland waters under the jurisdiction of PRC |
Foreign investment is still prohibited | Elimination of prohibition on foreign investment |
Mining | Exploration and development of oil and natural gas (except for coal-bed methane, oil shale, oil sands and shale gas) | Elimination of the requirement for Sino-foreign equity/cooperative joint venture operations | N/A (The 2018 edition had already effected such elimination.) |
Exploration and exploitation of molybdenum, tin, antimony and fluorite | Elimination of prohibition on foreign investment | Elimination of prohibition on foreign investment |
For any further questions, please contact Sun Hong, Lynn Yang or Tony Zhong of Norton Rose Fulbright, Shanghai Office.
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