Relaxing restrictions for foreigners entering the services industry

Opening up the domestic market and attracting foreign investment have become important goals of national policies. Ever since the introduction and execution of the One Belt, One Road initiative, the services industry has become a key area to attract foreign investors. This has also brought about new opportunities for foreign investors to enter the domestic market. The recent relaxation on restrictions for foreign investment entry is explained below.

Investment law and industry catalogue

Foreign Investment Law (draft). The rules for foreign investors to enter the Chinese servicing industry have mainly relied on the Law on Wholly Foreign-owned Enterprises, the Law on Sino-Foreign Equity Joint Ventures, and the Law on Sino-foreign Co-operative Joint Ventures, together with their corresponding details for execution. As restrictions on foreign investment entry have been relaxed, the Ministry of Commerce (MOFCOM) published the Foreign Investment Law (Draft for Comment) on 19 January 2015.

The changes made in the draft will transform the management model for the entry of foreign investment from a case-by-case examination and approval system to a pre-establishment national treatment with negative list formulated by the State Council. These changes not only satisfy the practical needs of China as a gradually evolving and opening economy, but also provide a fairer environment for foreign investors to enter the market, invigorating the services industry.

Ni Xudong is co-managing partner in the Shanghai office of East & Concord Partners. Xu Deren, an associate of the firm, also contributed to the article