28th August 2020
China is opening it’s market as the Negative list is reduced to 33 from 40. The Special Administrative Measures for Foreign Investment Access or better known as the “Negative List” in China is a list of industries where foreign investment is prohibited or heavily regulated. However, foreign investors can access regulated industries through joint ventures or cooperative structures. MSI's Chinese accounting member Lehman Brown provides further insight.
Any industry not listed on the negative list can be available to foreign Investors and be treated on an equal basis to Chinese Investors, though there are differences of the documentation which needs to be submitted, and whilst not on the negative list, the Government department which covers this industry may have other criteria that need to be met, and therefore in effect make the industry restricted in some way to foreign investment.
2020 Negative List
The 2020 Edition of the Negative will be in effect from July 23, 2020, reducing from its 2019 list of 40 to 33 and reducing the list for pilot free trade zone from 37 to 30. These reductions which China has revised, will scrap restrictions on foreign ownership in the financial sector, as pledged in the Phase one deal with the US, give access to city infrastructure, for cities with a population above 500,000, and civil aviation, removing the bans on air traffic control.
However, not all sectors are open and below are the details regarding restrictions on the Negative list in areas of interest to most foreign investors:
Information Transmission, Software and Information Technology Services
Leasing and business service
Health and social work
The reduction of the Negative List is a much-welcomed step for global investors as it shows a China which is opening its markets to the world after closing due to the pandemic. There are plenty of opportunities which can be had outside of the negative list, though as noted above, restrictions still exist sometimes at department approval levels.
LehmanBrown is a China-focused accounting, taxation and business advisory firm, operating dedicated offices in Beijing, Shanghai and Shenzhen with an extensive affiliate network providing service throughout China.
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