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Agricultural Development Bank of China
News for Outlets

China moves faster to make debut of new version of negative lists

March 26, 2020


Abstract : China is maintaining its paces in accelerating opening up despite the COVID-19 epidemic as regulators are striving to make an earlier debut of the new version of negative list for foreign investment.

BEIJING, March 26 (Xinhua) -- China is maintaining its paces in accelerating opening up despite the COVID-19 epidemic as regulators are striving to make an earlier debut of the new version of negative list for foreign investment.

As industry insiders held, the new version of negative list is likely to be released as early as in May and more breakthroughs in further opening the market access to service sector such as health care, old-age care, and finance are expectable.

A string of hefty opening up policies will be rolled out soon, including further broadening the scale of encouraged foreign investment, facilitating materialization of key foreign investment projects, and increasing preferential policies for attracting foreign investment in central, west and northeast China.

-- Shorter negative list and longer catalogue of encouraged sectors for foreign investment

On March 10, Chinese cabinet, the State Council made it clear on a regular meeting that the negative list for foreign investment should be further shortened and the catalogue of industries that encourage foreign investment should be expanded, so that foreign investors in more areas can enjoy preferential tax and other policies.

According to the Ministry of Commerce (MOC), National Development and Reform Commission (NDRC), the country's top economic planner, MOC and other relevant departments have kicked off the revision work on both the negative lists for foreign investment in China and pilot free trade zones.

In the past two years, the two negative lists were released in late June or early July. But this year, it was largely possible that their releasing might occur ahead of the schedule in May, said Zhang Fei, deputy director of the research center for foreign investment of Chinese Academy of International Trade and Economic Cooperation (CAITEC) under MOC.

As Zhang predicted, the revised versions will mainly seek to open up the service sector wider to the world, and breakthroughs will be made in opening up fields including health care, senior citizen care, finance, transportation, logistics, tourism, education and training, and telecom value-added service.

Pang Chaoran, a researcher with CAITEC, also said that the revised version of negative lists targeted replicating and applying the fruitful measures adopted in the pilot free trade zones in 2019 across the country. In addition, China will move faster to open up domestic weak industrial and supply chains to foreign-funded enterprises (FFEs).

Opening up to the outside world should serve the upgrading of China's industries and consumption structure, Zhang noted. During the prevention and control of the epidemic, enormous market demand and investment opportunities have emerged in the fields of biomedicine, public health, artificial intelligence, 5G and industrial internet, to which foreign-funded enterprises have paid close attention.

While shortening the negative list for foreign investment, China is likely to increase the number of sectors in the catalogue of industries for encouraged foreign investment.

As of March 17, China's provincial development and reform commissions and commerce departments have submitted a list of increased catalogue for industries attracting foreign investment. Later on March 19, the NDRC and MOC jointly issued an announcement to solicit public opinion on revision of the catalogue. Analysts pointed out that China is stepping up efforts to press ahead the revision, which shows the country's determination to open wider to the outside world.

As for the main factors which need to be taken into account when expanding the scope of encouraged foreign investment, Pang said that foreign investment should meet the basic requirements of China's high-quality economic development.

In his opinion, on the supply side, foreign investors will be encouraged to enter the underdeveloped production and manufacturing fields, while on the demand side, foreign enterprises will be encouraged to better meet the needs of domestic consumption upgrading.

From a regional perspective, foreign enterprises will be encouraged to increase investment in northeast China and the central and western regions, and push China's industrial chain to extend to the higher end, according to Pang.

-- Lots of measures taken to help FFEs' production resumption

Since outbreak of the COVID-19 epidemic, Chinese central government and local governments have taken a series of supportive measures to help foreign-funded enterprises to resume work and production as soon as possible.

As the effects of these measures showed, especially since March, the proportion of foreign-funded enterprises that resumed work and production continued to climb. According to data from China's MOC, as of March 12, over 70 percent of the 60 percent key foreign-funded enterprises in the manufacturing sector and more than 40 percent key foreign-funded enterprises in the service sector, excluding those in Hubei Province, had resumed production.

Previously on March 19, MOC announced at a press conference that it will work with other departments to make it a top priority to help foreign-invested enterprises fully resume work and production, so as to make the supporting policies effective and enhance their sense of gain.

NDRC said on March 17 that it will continue to help foreign-invested enterprises to solve the difficulties encountered in resuming work and production, especially to help them achieve full production as soon as possible.

NDRC also vowed to promote progresses in work of shortening the negative list for foreign investment, enlarging the scope of encouraged foreign investment, and stepping up efforts to advance major foreign-funded projects.

-- China to further optimize market environment

China will make great efforts to optimize the market environment for foreign investors from the aspects of system innovation and legal system improvement, and strengthen the protection of their rights and interests.

Previously on March 19, Ye Wei, deputy director-general of the Department of Foreign Investment Administration of the MOC, said China will keep optimizing investment environment for foreign investors, put implementation of the Foreign Investment Law and its supporting regulations well in place, establish a service system for foreign investment, improve the complaint mechanism for foreign-funded enterprises, and do a good job in attracting, protecting and stabilizing foreign investment.

What's more, China will also promote innovation in the 218 national economic development zones, give pilot free trade zones more autonomy in reform and innovation, and give better play to the exemplary role of key platforms for opening up in stabilizing foreign trade and foreign investment, said Ye.

As Pang reckoned, innovation and improvement of the opening up system will effectively help foreign-funded enterprises to bring down the institutional transaction costs. As the potential of the domestic market is brought into full play and the business environment has continuously been optimized, and more market access restrictions and hidden operation barriers for foreign-funded enterprises reduced, foreign-investors will be able to enjoy more of China's development dividends.

By far, a series of opening-up measures have further strengthened the confidence of foreign investors.

Rather than being slowed down by the COVID-19 outbreak, a group of strategically minded multinationals are stepping up their investments in China.

Lately, retail giant Costco announced that it will open its second store in China in Shanghai. A joint venture between Japanese automaker Toyota and China's car maker FAW was reported to invest 8.5 billion yuan or 1.22 billion U.S. dollars in a new electric car factory in Tianjin. Starbucks will invest 129 million U.S. dollars to build its most ecological roasting facility in the world in Kunshan, Jiangsu Province, which will be the former's largest coffee complex outside the United States. It will also be the largest overseas production investment of Starbucks. In Shanghai, Guangdong, Jiangsu, and Jiangxi, a number of foreign-funded projects have also been implemented through "cloud contracts signing". (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)

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Keyword: China foreign investment B&R Weekly negative lists

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