China further widens market access with new negative lists, industry catalogue

By Lu Yanan, People’s Daily

China’s National Development and Reform Commission (NDRC) and Ministry of Commerce (MOFCOM) on June 30 released revised negative lists for foreign investment market access and a revised catalogue of industries that encourage foreign investment, introducing greater opening-up measures.

The two lists aimed at pilot free trade zones (FTZ) and the rest of the country, respectively.

“The issuance of the revised negative lists and catalogue will attract more high-quality international capital and human resources to China, inject stronger power to China’s high-quality economic development, and help China and its partners build an international labor division at a higher level,” said Ye Fujing, head of the Institute of International Economic Research under China Society of Macroeconomics.

The documents demonstrated China’s adherence to trade and investment liberalization and resolution to promote in-depth development of globalization, which will exert prominent positive impacts on global cross-border direct investment, Ye added.

Implementing a new round of high-level opening-up policies, China has in recent years broken new ground in pursuing opening up on all fronts. After times of revision, the restriction measures in the 2018 negative list had been reduced by around 3/4 from the 2011 version. Market access has been eased in the manufacturing sector, and the service sector, as well as other industries will also be open further in an orderly manner.

“Though economic globalization is currently being impeded by unilateralism and protectionism, and transnational investment is impacted by trade friction, China will unswervingly stick to opening up and keep expanding market access,” said an official from the NDRC.

“It conforms to the demand of promoting international cooperation, and the demand of China’s own development as well,” the official explained.

The 2019 negative lists further cut restrictions and released a new batch of opening up measures. The number of items restricting foreign investment in pilot FTZs has been reduced by 17.8 percent, from 45 to 37, while that of the non-FTZ areas is down by 16.7 percent, from 48 to 40.

The major adjustments of the 2019 negative lists are made in three aspects. Firstly, the service sector will see greater opening-up in transport, infrastructure, culture, and value-added telecommunications. Secondly, market access will be eased in agriculture, mining and manufacturing industries.

Thirdly, the 2019 version of the pilot FTZ negative list for foreign investment has lifted restrictions on foreign investment in areas such as aquatic products fishing and publication printing, so as to give full play to the role of FTZs as a pilot ground for reform and opening-up.

According to Ye, China attracted a record high foreign direct investment (FDI) of $138.3 billion last year, up 1.5 percent year on year, remaining the world’s second largest recipient of FDI inflows.

In order to cope with new situations, NDRC and MOFCOM, with the approval of the State Council, initiated revision on the catalogue of industries that encourage foreign investment and a catalogue of advantageous industries for foreign investment in the country’s central and western regions. The two catalogues were later combined and titled the Catalogue of Encouraged Industries for Foreign Investment.

According to an official from NDRC, the 2019 version of the catalogue encourages foreign investors to invest in more fields, allowing them to enjoy favorable policies in more industries.

Besides, it encourages foreign investors to participate in high-quality development of the manufacturing sector, and keeps the sector a prioritized direction for foreign investment. Over 80 percent of the newly-added or revised items of the nationwide catalogue point to the manufacturing industry. Foreign investment is more encouraged in sectors such as high-end manufacturing, intelligent manufacturing, and green manufacturing.

The catalogue also encourages foreign investment to be made in the productive service sector. It shows more support for the sector and promotes the upgrading of the industry. In addition, it gives the central and western regions greater support to their embracing of industrial transfer of foreign-funded businesses.

An NDRC official noted that the foreign investment law issued last March stipulates that the State maintains a system of pre-entry national treatment plus a negative list management for foreign investment, elevating the results of reform onto the level of law. “This offers us a legal basis to implement the negative lists for foreign investment market access and relevant institutions,” the official said.

The lists will go into effect on July 30, and the 2018 versions will be invalid then, the official introduced. “Laws and documents relating to new measures of opening up should be timely revised or abolished to increase the consistency of the policy, and market access restrictions not on the negative lists will be fully lifted before the end of this year,” the official said.