context: The state vows to remove all restrictions on foreign investment for sectors not included on the negative list. FDI was critical for upgrading local industries and boosting economic growth in emerging sectors. The decrease of items on negative lists will certainly attract more FDI as well as facilitate the negotiation of bilateral investment treaties and trade cooperation.

The National Development and Reform Commission and the Ministry of Commerce released two negative lists on 30 Jun 2019, one for pilot free trade zones (FTZs) and one for the rest of the country. Pilot FTZs have 37 listed items, reduced from 45, while non-FTZ areas have 40 items, down from 48.

The new negative lists have opened for foreign investment in

  • transportation
    • lift the requirement that domestic shipping agencies be controlled by Chinese shareholders
  • infrastructure
    • lift the requirement that gas and heat pipelines in cities with a more than 500,000 in population be controlled by Chinese shareholders
  • culture
    • lift the requirement that theatres and performance brokerage institutions be controlled by Chinese shareholders
  • value-added telecommunications
    • lift restrictions on foreign investment in domestic multi-party communications, and store-and-forward and call centre services

The lists also eases market access for

  • agriculture
    • abolishes the ban on foreign investment in wildlife resources exploitation
  • mining
    • exploration and development of petroleum and natural gas no longer limited to Chinese-foreign equity or non-equity joint ventures
    • ends the ban on foreign investment in the exploration and exploitation of molybdenum, tin, antimony and fluorite
  • manufacturing
    • cancels the ban on foreign investment in Xuan paper and ink ingot production

The pilot FTZ negative list is open for foreign investment in

  • aquatic products fishing
  • publication printing

Lifting restrictions on foreign investment in areas such as shipping and value-added telecommunications will have major impact, notes Cui Fan 崔凡 University of International Business and Economics professor. This transformation, from the Foreign investment industrial guidance catalogue to negative lists and Catalogue of Encouraged Industries for Foreign Investment, is on the right track, says Cui.

The lists are not open to IDC as expected, because post-access supervisory management and market exit mechanisms are not matched for further opening-up, says Zhou Nianli 周念利 UIBE WTO Research Institute professor.