On 23 June 2020, the National Development and Reform Commission and the Ministry of Commerce released the <Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020)> (“Negative List”). According to the Negative List, from 23 July 2020 onward, the restrictions on foreign investments in securities, futures, life insurance, commercial vehicle manufacturing, and the construction and operation of water supplies and drainage networks in cities with a population of more than 500,000 shall be lifted.
This amendment further reduces the negative list of foreign investment access. This is the fourth consecutive year that China has revised the negative list with regards to foreign direct investment in the country since 2017.
Compared to the 2019 edition, the restriction on the Negative List of 2020 have been reduced from 40 to 33. The level of openness in the services, manufacturing and agricultural sectors has been further improved.
The highlights are as follows:
1. Accelerating the process of opening up key services areas:
In the financial sector, China will scrap foreign shareholder limits in securities companies, fund houses, futures companies and life insurance firms. ( For more information about more opening up in this sector, please visit our previous post: China-More Opening-up in Financial Sector )
In the infrastructure sector, the requirement that the construction and operation of water supply and drainage networks in cities with a population of more than 500,000 must be controlled by Chinese investors shall be removed.
2. Easing market access restriction in manufacturing and agriculture sectors:
In the manufacturing sector, liberalize the restrictions on foreign-funded share ratios in the manufacture of commercial vehicles and scrap a ban on foreign investments into companies that smelt and process radioactive resources and produce nuclear fuel.
In the agricultural sector, for the selection and seed production of new wheat varieties, a majority Chinese shareholder is not required anymore, as long as Chinese shareholders own not fewer than 34% of the equity.
On the same day, the <Special Administrative Measures (Negative List) for the Access of Foreign Investment in Pilot Free Trade Zones (2020)> was released too, the entries in the Negative List were also reduced from 37 to 30.
According to the amended Negative List, In the medicine sector, the prohibition of foreign investments into Chinese medicine have been removed. In the education sector, wholly foreign-owned vocational education institutions are allowed to be established.
Link to the original list:
Special Administrative Measures (Negative List) for the Access of Foreign Investment (2020)
