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Global | Publication | December 2019
In our China Foreign Investment Expert Q&A series, we update you on recent developments in China’s foreign investment laws. The spotlight for this update is on the civil aviation industry.
The latest 2019 edition of the Special Administrative Measures for the Market Entry of Foreign Investment (the National FDI Negative List) was published on June 30, 2019 and came into effect on July 30, 2019. Foreign investors can invest in an industrial sector which does not fall into the 2019 edition of the National FDI Negative List in the same manner as domestic investment.
However, this does not mean foreign investors are now free to conduct business in China without any licensing requirements. If a foreign investment falls into the licensed business category of the 2019 edition of the Market Access Negative List (the Market Access Negative List), relevant regulatory review and approval procedures must be fulfilled and proper license or approval received before the foreign-invested enterprise (FIE) can conduct the relevant business in China.
The most recent liberalization of the civil aviation industry took place in 2018 in accordance with the 2018 edition of the National FDI Negative List. Under the 2018 edition, design, manufacture and repair of various kinds of aircraft, which used to fall within the “restricted industry” under the legacy Catalogue of Industries for Guiding Foreign Investment (2017 Edition) (the Legacy Foreign Investment Catalogue), were opened to foreign investment. Other sectors that formerly were subject to restrictive requirements or were plainly prohibited under the Legacy Foreign Investment Catalogue remained the same in the 2018 edition and the 2019 edition of the National FDI Negative List. In other words, the 2019 edition of the National FDI Negative List did not introduce any further relaxation in the civil aviation industry.
This summary table sets out the relevant restrictions and requirements under the Legacy Foreign Investment Catalogue (2017 Edition) and the 2018 & 2019 editions of the National FDI Negative List:
Legacy Foreign Investment Catalogue (2017 Edition) | National FDI Negative List (2018 and 2019 Editions) |
---|---|
Restricted industries:
Restrictive requirement:
|
No restriction. |
Restricted industry:
Restrictive requirement:
|
No restriction. |
Restricted industry:
Restrictive requirement:
|
Remains unchanged from the Legacy Foreign Investment Catalogue. |
Restricted industry:
Restrictive requirements:
|
Remains unchanged from the Legacy Foreign Investment Catalogue. |
Restricted industry:
Restrictive requirements:
|
Remains unchanged from the Legacy Foreign Investment Catalogue. |
Prohibited industry:
|
Remains unchanged from the Legacy Foreign Investment Catalogue. |
The Civil Aviation Administration of China (and its local offices) (CAAC) is the competent regulatory authority of the civil aviation industry. Foreign investment in the civil airports, public air transportation companies, general aviation companies and air transportation-related projects (e.g., air fuel, airplane repair, freight transport and storage, ground services) is subject to the approval by CAAC. CAAC has discretion whether or not to grant approval, taking into account the prevailing market conditions. For example, it has been generally difficult to obtain CAAC approval for any investment in public air transportation companies which operate trunk lines, whilst investment in operators of regional lines or general aviation companies seems to be comparatively easier to get approved.
In case the specific sector of the civil aviation industry which is to receive foreign investment (by way of greenfield investment or acquisition) falls within the National FDI Negative List as outlined in the table above, approval by the Ministry of Commerce or its competent local counterparts is also required.
As is generally the case for foreign investments in any other industries, the establishment of an FIE or the acquisition of an existing entity in the civil aviation industry should be registered with the State Administration for Market Regulation or its local counterparts subsequent to the granting of regulatory approvals as referred to above
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In June 2023, the Texas Legislature enacted legislation creating a new trial court and a new court of appeals with jurisdiction over certain complex business disputes.
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