Developments on China’s negative list, FI access

In recent years, China has been overhauling its decade-long foreign investment regulatory framework to be more in line with international practices, and to continue attracting foreign investment. One significant development is to change the previous “approval system” of foreign investment into a “registration system”. The other is to gradually implement the “national treatment plus negative list” approach for access of foreign investment to China.

Along this line, the Chinese government recently issued two important regulations relating to the foreign investment negative list: the Foreign Investment Industrial Guidance Catalogue (2017 amendment) and the Special Administrative Measures (Negative List) for Admission of Foreign Investments to Pilot Free Trade Zones (2017 version), which reflects the most recent development of China on foreign investment and the negative list.

In China, there have always been restrictions and barriers on entry to Chinese market by foreign investment. However, over time such restrictions have become formalized and more transparent.

China began to experiment with the true concept of negative list regulation in its newly-established free trade zone. When Shanghai became the first free trade zone (FTZ) of China in 2013, the Shanghai government quickly issued a negative investment list, which set out only those access measures applicable to foreign investments that are inconsistent with national treatment. For the fields not covered by the negative list, the approval system for foreign investments in the Shanghai FTZ must be replaced by the registration system. This is the first negative investment list in a real sense for China.

Liu Hongchuan is a senior partner at Broad & Bright. Jiang Yan and Hemmat Ovaisi also contributed to this article