Chinese Government Further Liberalizes Market Access for Foreign Investment —— Release of 2018 Negative List

The National Development and Reform Commission (“NDRC”) and the Ministry of Commerce (“MOFCOM”) jointly promulgated the 2018 version of the Special Administrative Measures on Access to Foreign Investment 2018 (“2018 Negative List”) on 28 June, 2018, which has entered into force on 28 July 2018. Subsequently, the Special Administrative Measures for Foreign Investment Access to Pilot Free Zones (“2018 FTZ Negative List”) was also released on 30 June, effective from 30 July, 2018.  By releasing the 2018 Negative List and 2018 FTZ Negative List, the Chinese government further liberalizes the market access in more than 20 sectors to foreign investments, including but not limited to agriculture, energy, resources, finance, automotive, ship and aviation devices manufacture, infrastructure, transportation, trade and culture.

Remove the restrictions on foreign investment in several manufacture sectors

Sector

Details

Automotive Manufacture

2018

Remove the restriction on proportion of foreign investment for special vehicle and new energy vehicle manufacture

2020

Remove the restriction on proportion of foreign investment for commercial vehicle manufacture

2022

Remove restrictions prohibiting a foreign investor from setting up more than 2 joint venture manufacturing passenger vehicles in China

Ship Manufacture

Remove the requirement of control by a Chinese entity for (partly) design, manufacture and repair of ships

Aviation Devices Manufacture

Remove the requirement of control by a Chinese entity for design, manufacture and maintenance of mainline and regional aircraft, design and manufacture of helicopters of above 3 tons (inclusive), design of ground and surface effect aircraft, and design and manufacture of drones and aerostats

Remove the requirement of establishing a joint venture for design, manufacturing and maintenance of utility aircraft

Confirm the timetable for opening up financial sector

Following the announcement of further opening of the financial market by Chinese President Xi Jinping on April 2018 at the Boao Forum, the 2018 Negative List specifically defined the timetable for opening up Chinese financial markets.

Sector

Details

Banking

2018

Remove the restriction on foreign shareholding, i.e. 20% of one foreign investor and 25% of total shares hold by multiple foreign investors, in Chinese commercial banks

Securities and futures

2018

Change the allowed proportion of foreign investments in securities companies, securities investment management companies, futures companies from 50% to 51%

2021

Remove the restrictions on proportion of foreign investments in securities companies, securities investment management companies, futures companies

Insurance

2018

Change the allowed proportion of foreign investments in life insurance companies from 50% to 51%

2021

Remove the restrictions on proportion of foreign investments in life insurance companies

Further opening the commerce and transportation sectors

Sector

Details

Sale of Agricultural Products 

Remove restrictions on proportion of foreign investments for the purchase and wholesale of rice, wheat and maize

Sales of Refined oil

Remove restrictions prohibiting a foreign investor from setting up more than 30 chain petrol stations and selling different types of brands of refined oil from multiple suppliers

Remove the requirement of control by a Chinese entity for operating chain petrol stations

Transportation 

Remove the requirement of control by a Chinese entity for railway passenger transportation company and shipping agency 

Remove the requirement of establishing a joint venture for international maritime transportation

The 2018 Free Trade Zone Negative List 

Comparing with 2018 Negative List, 2018 FTZ Negative List takes further trail measures in various free trade zones for liberalizing the market access in exploitation of petroleum and natural gas, education, culture and entertainment, value-added telecommunications.

A more open and optimized market in China 

The promulgation of 2018 Negative List and 2018 FTZ Negative List showed the attitude of Chinese government with regard to further liberalization of market access to foreign investors. Meanwhile, the foreign investors will also benefit from the simplification of administration by the governmental authorities in different levels. 

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