China is expected to release and implement two updated foreign investment negative lists by June 30, a concrete move to further liberalize market access for foreign investors, the Ministry of Commerce said on May 31.
“The improved lists, one for nationwide implementation and one for pilot free trade zones, would further remove or loosen existing restrictions on foreign investment”, said Gao Feng, a spokesman of the commerce ministry.
Besides the finance and automobile sectors that have already been announced, other sectors subject to the upcoming lists will include “energy, resources, infrastructure, transportation, commercial and professional services”, Gao said.
There will be a transitional period for some industries, and the new lists will set out specific opening-up measures that will be unveiled in the next few years, he said.
Negative lists identify sectors where foreign participation is restricted. It is a common practice adopted in many countries to manage foreign investment.
Wei Jianguo, vice-president of the China Center for International Economic Exchanges, said further opening-up is a prerequisite for a high-level trade structure, and a key driver to ensure high-quality economic growth.
Easing restrictions on foreign investment could help improve the business environment for all companies, sharpen domestic companies’ focus on innovation and improve their competitive position, said Wei, a former vice-minister of commerce.
China has rolled out a slew of measures to further broaden its market access since the beginning of 2018, a year that marks the 40th anniversary of the country’s reform and opening-up policy.
In April, the National Development and Reform Commission said the limits on investment in shipbuilding, new energy vehicles, and aircraft manufacturing will be removed by the end of this year. The country will also gradually remove investment limits in the automobile sector in the next five years.
Zhuge Qin, deputy secretary-general of Beijing Business Aviation Association, said such measures were a good beginning, as foreign capital will help in further development of the domestic industry. “Foreign investors can consider moving business operations like aircraft maintenance to China,” he said.
But he also said it is not certain if the foreign investors would transfer advanced technology to China. Many investors are keen on aircraft assembling while materials, machine parts manufacturing and avionics systems are less preferred, he added.
“Although such policies will benefit the industry, investors need to find what the market really needs,” Zhuge said.
Data from the commerce ministry showed that foreign direct investment into the Chinese mainland surged 7.9 percent year-on-year to 877.56 billion yuan ($136.36 billion) last year, a record.
Earlier this week, the State Council, China’s cabinet, said the country will further enhance investment facilitation based on international standards. Provincial governments will be given the right to set up or alter the businesses of foreign-invested enterprises with total investment of $1 billion or less mentioned in the upcoming lists, according to a statement.