China's Pilot FTZs: New Negative List further relaxes foreign investment sectors

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China's Pilot FTZs: New Negative List further relaxes foreign investment sectors 

Business Regulation and Tax Newsflash

Issue 21 - 7 May 2015

China’s General Office of the State Council released a new “Negative List” on 20 April 2015 that further relaxes foreign investment sectors; the list was released with the framework plans for three new pilot free trade zones (FTZs) in Fujian, Guangdong and Tianjin. As from 8 May 2015, the Negative List will be applied in these Pilot FTZs, as well as in the Shanghai Pilot FTZ (in the latter FTZ, the new Negative List will supersede the 2014 list).

The Negative List sets out the sectors in which foreign investment is either restricted or prohibited. Foreign investors engaged in activities that are not included on the list will enjoy the same treatment as domestic investors (i.e. national treatment), so it will not be necessary to obtain pre-approval for a foreign investment project or to set up a foreign-invested enterprise. Instead, a filing (i.e. reporting) requirement will apply. If a more favorable policy is granted to foreign investors under a free trade agreement or other similar agreement (notably certain policies applicable to investments from Hong Kong, Macau or Taiwan in Guangdong or Fujian granted under the Mainland and Hong Kong/Macau Closer Economic Partnership Agreement or the Economic Cooperation Framework Agreement), the provisions of that agreement will prevail.

The 2015 Negative List reduces the number of "special (restrictive) measures" from 139 to 122, indicating that the government generally is expanding foreign access. Major sectors in which restrictions have been lifted by this revision include the following:

Sectors

Subsectors where special (restrictive) measures are substantially removed

Manufacturing

Farm food processing; manufacturing of alcohol, drinks and refined tea; manufacturing of chemical raw materials and chemical products; manufacturing of pharmaceutical products (excluding traditional Chinese medicine); manufacturing of general and specialty equipment; and manufacturing of electrical machinery and materials

Construction

Construction and operation of city subways and light railways

Wholesale and retail

Wholesaling of grains and cotton; distribution of audio and video products, pesticides; chain stores retailing books, newspapers and periodicals; establishment and operation of gasoline stations; direct selling and online retailing

IT services

E-commerce business

Financial services

Insurance intermediary institutions (including insurance brokers, agents and assessment companies); securities investment consulting institutions

Real estate

Investment in luxury hotels, high-class office buildings, international conference centers; real estate development

Business services

HR agencies; overseas travel agencies

 

Please follow the link for a copy of the new Negative List in Chinese. You may also access the relevant information and regulations about Pilot FTZs via Deloitte's dedicated portal page.

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