← back to the state act
Inception date: 28 Jun 2017 | Removal date: open ended

FDI: Entry and ownership rule

After one and a half years of commentary and discussion, at the end of June 2017, China released its new iteration of the 'Foreign Investment Guidance Catalogue', which shows more openness to such investment than the previous (2015) edition, with only 63 limited/prohibited industries in 2017, down from 96 in 2015.

The catalogue, running since 1997, delineates in which industries the PRC authorities want to encourage investment and in which they want to limit/prohibit foreign investment.

'Encouraged' industries can benefit from reduced restrictions on setting up businesses and earning money from businesses where foreign capital is invested, as well as preferential land acquisition and tax breaks, among other things. For one example, see related measure.

Sectors that will particularly benefit are:

  • Service industry: operation of highway passenger transport services; operation of ocean shipping tally companies; operation of credit investigation and rating services; operation of accounting and auditing services; and the establishment and operation of comprehensive water conservancy projects
  • Manufacturing industry: manufacture of rail transport equipment; research, development and manufacture of automobile electronic bus network and electronic controllers for electric power steering systems; manufacture of high energy power batteries for new energy automobiles; manufacture of motorcycles; design and manufacturing of civil satellites; processing of edible oil and fats from soybean, rapeseed, peanut, cottonseed, camellia seed, sunflower seed, and palm; processing of rice, flour and crude sugar, and deep processing of corn. Motorbike manufacturers no longer obligated to be a joint venture with a domestic Chinese firm.
  • Mining industry: exploration and development of oil shale, oil sands, shale gas, and other unconventional oil and gas; exploration and mining of precious metals (gold, silver, platinum group); lithium mining and mineral processing; and smelting of rare metals including tungsten, molybdenum, tin (excluding tin compounds), and antimony (including antimony oxides and antimony sulphides).

The 2017 version of the list is also explicitly intended to supersede/combine other lists into one master list, simplifying the process for foreign firms seeking approval. Specifically:

  1. The Catalogue for Guidance of Restructuring Industries/《产业结构调整指导目录》 (i.e. it is the general industrial policy applicable to both pure domestic and foreign investment, containing “encouraged” and “prohibited” (named as “Restricted” and “To-be-eliminated”) industries.
  2. The Catalogue of Investment Subject to Verification of the Government / 《政府核准的投资项目目录》 (i.e. the catalogue of fixed asset projects subject to verification of competent NDRC, which is applicable to both pure domestic and foreign investment);
  3. The Collective List of Items Subject to Administrative Approval of Each Department of the State Council / 《国务院各部门行政审批事项汇总清单》 (i.e. the list of all matters which requires administrative approval from the mentioned authorities, including the foreign access related matters. Applicable to both pure domestic and foreign investment); and
    Other market access administrative matters which are established according to law, administrative regulations or decisions of the State Council / 依据法律、行政法规、国务院决定设定的市场准入管理事项 (i.e. we understand that it is a catch-all clause to include any scattered market access restrictions. Application depends on specific situation).




Please report this page in case you detect an inaccuracy in its content.