Sectors benefitting from the new Negative List of foreign investments
Financial sector: The new Negative List removed the restrictions on foreign shareholdings. For instance, the amended rule has lifted the foreign ownership caps on securities and futures. These include:
- Securities companies
- Securities investment fund management companies
- Futures companies
- Life insurance companies
Infrastructure sector: Previously, China required that the construction and operation of water supply and drainage pipe networks in cities with a population of more than 500,000 must be controlled only by Chinese parties. This restriction has also been lifted effective on July 23.
Transportation sector: Foreign investments in public air transport companies are allowed but on a ratio that does not exceed 25 percent. In contrast, the amendment concluded the non-participation of foreign investors in the construction and operation of airport towers.
Leasing and business services and health and social work sector: Previously, foreign participation was limited to equity or cooperative joint venture. However, the new rule eliminated the “cooperative joint venture” in relation to the revised law on Sino-foreign joint ventures. Thus, market research projects and medical institutions are limited to “joint ventures”, respectively.
Manufacturing and agriculture
Manufacturing sector: The relevant departments also announced the liberalization of the restrictions on foreign shares regarding commercial vehicle manufacturing. Furthermore, foreign investors can now have access to investments related to the smelting and processing of radioactive minerals and the production of nuclear fuel.
Agriculture sector: The Chinese party’s share in the selection and breeding of new wheat varieties and seed production has been relaxed to not less than 34 percent. On the other hand, the Chinese party shall control the selection and breeding of new corn varieties and seed production.
Opened sectors in FTZs
Pharmaceutical sector: Foreign investment in Chinese herbal medicine involving extracts is now allowed.
Education sector: Wholly Foreign-Owned Enterprises (WFOEs) can now establish institutions for vocational and training education.
Under the new Foreign Investment Law, China’s NDRC emphasizes an exemption in the new Negative Lists. According to NDRC’s statement during an interview, the provisions may not apply for specific foreign investments depending on the approval of relevant authorities. Hence, it signals a more welcoming opportunity and a greater chance for foreign investors to do business in China.
If you want further assistance with investing in the relevant sectors, you may email us at [email protected] or call our offices in different China locations. Our local experts will attend to your needs. Also, visit our corporate finance page to see more details of our business-related specialist services.
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