December 27th, 2020 - The Chinese government published a new, expanded edition of the list of sectors in which foreign investments are 'encouraged'.



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PRC State Council, December 27th, 2020. (发展改革委 商务部令2020年第38号 鼓励外商投资产业目录(2020年版))

Inception date: 27 Dec 2020 | Removal date: open ended

FDI: Entry and ownership rule

On December 27th, 2020, the Chinese National Development and Reform Commission and Ministry of Commerce released Order 2020/38, in which the 2020 Encouraged Foreign Investment Catalogue (hereafter, 'Catalogue') was released.

The 2020 edition of the Catalogue saw 127 new items added over the previous year's (see related acts section). 65 of these new 'encouraged' sectors were in the national portion of the Catalogue, with 62 in the regional portion.

A sector's inclusion in the Catalogue means that foreign entities can invest in the sector with fewer restrictions and less scrutiny than those not included, or those included on various other negative lists of sectors (see related acts section for example).

The three main benefits of inclusion in the Catalogue are that certain goods can be imported tariff-free under a policy from 2017 (see related act), land prices are reduced and the investee firm has more control over what land is used for (this is usually heavily regulated by the Chinese authorities), and corporate income tax is lowered from 30 to 15%.

Some of the added sectors are pertinent to the Catalogue's promulgation at an 'uncertain time' for the world economy, with various additions in medical devices, pharmaceuticals and medical R&D sectors. There were additions in other sectors relating to the manufacture of high-tech components, in line with the Chinese government's broader policy of shifting towards an economy driven by the manufacture of such products, as opposed to basic consumer goods.

The new Catalogue went into effect upon its promulgation.

Below is a summary of the new sectors added to the Catalogue.

  • Integrated circuits
  • Packaging equipment
  • Laser projectors
  • UHD TVs
  • Ventilators
  • ECMO machines
  • AI-driven medical equipment
  • Autopilot hardware
  • New materials such as special glass fibre and environmental biofilms
  • Advanced manufacturing components, such as sensors and bearings
  • Environmental remediation equipment, if based at a marine port
  • Vaccines
  • 5G technology R&D
  • High-end manufacturing equipment maintenance services
  • Blockchain technology R&D
  • Bulk commodity export-import centres
  • Online/virtual-based services such as education, healthcare, offices, etc.