China has updated its Negative List for market access which was released on December 10, 2020. China’s National Development and Reform Commission announced the shortening of the Market Access (MA) Negative List (2020 Edition) to further accommodate investors in China and from foreign countries.
Have a look at our previous article on Foreign Investments Opening in China’s Major Industries
Different from the Foreign Investment (FI) Negative List 2020, the MA Negative List refers to all kinds of investments in China made by whether domestic or foreign investors.
The newly updated China Market Access Negative List
Since 2018, China has been modifying its MA Negative List to signal more openness for foreign investments. From 151 items on the list, it is now down to 123 items, based on the document Development and Reform Commission (2020) No. 1880.
NDRC removed 14 regulations from the list and relaxed requirements pertaining to certain sectors such as oil and gas, resource management, trading, and financial services.
Some of the lifted or deleted measures include approval or qualifications for the following areas:
- Oil and gas exploration and production
- Carbon emissions assessment
- Mining right appraisal agencies
- Evaluation for forest resource assets
- Appointing new executives in securities companies
- Asset evaluation agencies for securities services
- Inspection services for imported and exported goods
- Customs declaration license and registration for enterprises
On the other hand, the new MA Negative List added restrictions for establishing financial holding companies and the licensing for the large-scale transfer of land management rights.
Encouraged Catalogue of Industries for China market access
The Encouraged Catalogue of Industries refers to the list of specific industries where foreign investments are encouraged nationwide and in Central and Western China. This means that these industries are still lacking technologies or investments and China encourages foreigners to invest in these areas.
In the 2020 Encouraged Catalogue of Industries, China has increased the number of industries for encouraging foreign investments and added 127 items (65 items nationwide and 62 items in Central and Western China). Furthermore, NDRC also amended 88 items in which 51 items are encouraged nationwide and 37 items are encouraged in Central and Western China.
The newly modified Encouraged Catalogue nationwide highlights changes for the manufacturing and services industry.
For the manufacturing industry, the following items were either added or modified:
- Raw materials: high-purity electronic grade hydrofluoric acid, hydrogen fluoride, special glass fiber, polarizer base film, diffusion film, mask, polyethylene polyamine, and high-performance fiber, etc.
- Manufacturing components: high-pressure vacuum components, special valves, special bearings, special glass and wheel speed sensors, etc.
- Final products: integrated circuit testing equipment, L3/L4/L5 autonomous driving hardware, laser projection equipment, ultra-high-definition televisions, ventilators, ECMO and artificial intelligence assisted medical equipment, etc.
For the services industry, the following items in certain sectors were either added or modified:
- R&D and research design: fifth-generation mobile communication technologies, development of blockchain technologies, and design of sewage treatment facilities
- Business services: maintenance of high-end equipment, transformation, and integration of digital production lines.
- Modern logistics: cross-border e-commerce retail, distribution centers for import and export of bulk commodities, and community chain distribution.
Added items for Central and Western China industries
Key takeaways
Overseas and domestic market players should also refer to the prohibited and restricted list of industries for market access. Prohibited industries do not allow any kind of business activity or engagement such as those established under the law. These industries may belong to technologies, financial, or internet-related business activities.
On the other hand, foreign investors who want to access the restricted industries need to file an application to the respective authority. Industries under restrictive measures may include a range of business activities in particular areas such as agriculture, transport, manufacturing, or even culture, sports, and entertainment. Therefore, it is best to consult a local expert to guide you through specific measures.
Industries that do not belong to the Negative List are open for investment to all market players.
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