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May 26, 2017

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Shorter negative list for investment

WITH a shorter negative list for foreign investment, China has made a further step in opening up its vast market.

A revised guidance catalog for foreign investment in China will soon come into force, with relaxed restrictions on foreign ownership in automotive electronics, new-energy vehicle batteries, motorcycles and other industries, the Ministry of Commerce said yesterday.

The new catalog was adopted on Tuesday at the 35th meeting of the Central Leading Group for Deepening Overall Reform, which urged further opening-up in sectors as services, manufacturing and mining.

A draft of the catalog, which was published earlier to solicit public opinion, showed the number of industries restricted or off limits to foreign investment, the negative list, would be cut to 62 from 93.

The revision was viewed as another significant move by China to open up its economy for mutual benefit in a global environment of rising protectionism.

“It was a step forward for China to open up its economy on a larger scale and deeper level,” said Liu Hong with the China Association of International Trade.

China is moving fast to lower thresholds for foreign investors. More industries have been accessible to foreign investment in the country’s free trade zones, while laws were amended last year to simplify the approval procedures for foreign companies.

Today, over 95 percent of new foreign enterprises in China do not need government approval before they are set up, and the registry procedures take less than three days, compared with more than 20 days previously, said Fang Aiqing, vice minister of commerce.

Authorities have also pledged to treat foreign firms the same as domestic companies when it comes to license applications, standards-setting and government procurement.

Wang Diankai, an economist at Capital University of Economics and Business, highlighted the negative list approach, calling it a major change in China’s management of inbound investment.

“The approach sets the limits of government authority and gives foreign firms more freedom,” Wang said.

China first piloted the negative list approach for foreign investment in the Shanghai free trade zone in 2013 and expanded it to four regions in 2015.

“The overall market environment in China is increasingly regulated and fair, with improved laws, reduced red tape and better protection of intellectual property rights,” said Sara Dai, regional president for Asia-Pacific of Danish biotechnology giant Novozymes.

She also called for clearer regulations to encourage orderly competition and further expansion of market access.


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