Opening Doors for More Foreign Direct Investment

In order to maintain China's position as a major destination for global foreign investment and promote Chinese inbound investment, on June 10, 2018 the State Council issued the State Council, Circular on Several Measures Concerning the Active and Effective Use of Foreign Investment to Boost High-quality Economic Growth (国务院关于积极有效利用外资推动经济高质量发展若干措施的通知) (Guo Fa [2018] No.19, “the Circular”). As instructed by the Circular, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) published the first Special Administrative Measures for Foreign Investment Access (Negative List) (外商投资准入特别管理措施) (Negative List) on June 28, 2018. The Negative List derives from the Foreign Investment Industrial Guidance Catalogue (Amended in 2017) (外商投资产业指导目录 (2017年修订)) (the Catalogue), which has been in use for many years in China, and is comprised of the Encouraged Catalogue, the Restricted Catalogue and the Prohibited Catalogue.

Both the Circular and the Negative List provide new guidelines and opportunities to foreign investors who are interested in the China market. This is the first time that the Chinese government has recognized a nationwide treatment of foreign investment though there are slight differences between the Negative Lists applicable inside and outside the Free Trade Zones. The outcome is that foreign investors may now invest in any sectors open to domestic private investors.