In the News: New Negative List; Audit Records Sharing; and Ownership Cap Lift
July 09, 2019 | BY
Marilyn RomeroChina has released a new negative list with fewer sectors off limits to foreign investment; Hong Kong’ regulators will now have access to Chinese companies’ audit records; and foreign ownership caps on Chinese financial firms will be lifted by 2020.
China cuts curbs on FDI with new, shorter negative list
The National Development and Reform Commission, or NDRC, announced on June 30 that it has relaxed foreign investment curbs on a number of sectors. According to the new Negative List on the NDRC’s website, the number of sectors and subsectors in which limited or no foreign investment is permitted has now been cut to 40, down from 48 in the previous version released in June last year. The new list will take effect on July 30.
Investment in petroleum, gas, and some metal resources exploration is now permitted, along with widened access to agriculture, mining and manufacturing. Domestic shipping agencies, gas and heat pipelines in cities with more than 500,000 people, and cinemas and performance agencies no longer need to be controlled by Chinese entities. The announcement of the new list was made the day after the United States and China agreed to restart trade talks.
More from CLP: Legislation roundup: National and FTZ negative lists, and encouraged foreign investment catalogue; Special Administrative Measures for Foreign Investment Access (Negative List) (2018 Edition); PRC Foreign Investment Law; Special Administrative Measures for Foreign Investment Access in Pilot Free Trade Zones (Negative List) (2018 Edition)
China allows Hong Kong regulators access to mainland audit records
China’s Ministry of Finance and the China Securities Regulatory Commission have agreed with the Hong Kong Securities and Futures Commission, or SFC, to allow the latter to have access to audit papers kept on the mainland. It will also allow other Hong Kong regulators to access audit records of mainland-based companies. China has long been reluctant to allow overseas regulators, including those in Hong Kong, to inspect audit documents relating to mainland firms, citing national security concerns. In a statement, SFC Chief Executive Officer Ashley Alder said the agreement is “a significant milestone to enhance cooperation with the mainland regulators in order to combat instances of misconduct among mainland businesses listed in Hong Kong”.
China to lift foreign ownership caps for financial firms earlier than planned
China will abolish caps on foreign ownership of securities, futures and life insurance firms by 2020, one year earlier than originally planned, said Premier Li Keqiang at the Summer Davos conference of the World Economic Forum in Dalian, northeast China. The move is part of the Chinese government’s efforts to open the country’s $44 trillion financial industry to overseas participation, an objective that it unveiled in late 2017. China has been introducing reforms that make it more attractive and convenient for foreigners to buy its stocks and bonds, and allowing foreign-owned securities firms is another way to encourage that.
The Chinese premier also said that China will further open its manufacturing sector and auto industry; as well as reducing its negative investment list that restricts foreign investment in some sectors.
More from CLP: Measures for the Administration of Foreign-invested Futures Companies; Measures for the Administration of Foreign-invested Securities Companies; Implementing Rules for the PRC Administration of Foreign-invested Insurance Companies Regulations (Revised); China’s New Foreign Investment Law: Implications for the Future of FIEs
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