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New Negative List sets FDI roadmap
| BY
Katherine JoHow industry barrier changes in the previous and new versions of the Foreign Investment Catalogue--and the introduction of the Negative List system--impact market access compliance
The new and improved bible for foreign direct investment (FDI) has consolidated several traditional industry restrictions and opened up key areas for innovative growth. The Foreign Investment Industrial Guidance Catalogue (Amended in 2017) (2017 Catalogue), issued by the National Development and Reform Commission and the Ministry of Commerce on June 28, 2017, entered into force on July 28, replacing the 2015 Catalogue.
The Negative List system
The 2017 Catalogue brings a key structural change. While the 2015 Catalogue was divided into three categories: encouraged, restricted and prohibited, the 2017 Catalogue has only two: encouraged, and the Special Administrative Measures for Foreign Investment Access (Negative List). The Negative List is further divided into the restricted and prohibited categories.
The Negative List borrows and integrates terms listed in the 2015 Catalogue. The 2017 Catalogue places all restrictions on foreign investment access in China in the Negative List, including those on equity ratios and senior executives. However, restrictions that apply to both domestic and foreign investments and are irrelevant to market access are not included in the Negative List.
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