China Issued Negative List of Foreign Investment Access

On December 27, 2021, the National Development and Reform Commission and the Ministry of Commerce jointly issued the "Special Management Measures for Foreign Investment Access (Negative List) (2021 Edition)" (“Negative List”) and the "Special Management Measures for Foreign Investment Access (Negative List) of Pilot Free Trade Zones (2021 Edition)" (“Negative List”), Effective from January 1, 2022.

Compared with the 2020 version, the 2021 version of the negative list for foreign investment access further deepens the opening up of the manufacturing industry. In the field of automobile manufacturing, the restrictions on the foreign shareholding ratio in passenger car manufacturing and the restriction on the same foreign company's establishment of two or less joint ventures in the country for the production of similar complete vehicle products have been lifted. In the field of radio and television equipment manufacturing, the restrictions on foreign investment in satellite television broadcasting ground receiving facilities and the production of key components will be removed, and management will be conducted in accordance with the principle of consistent domestic and foreign investment. This revision has achieved zero clearing of manufacturing items on the negative list of the Pilot Free Trade Zone.

At the same time, the pilot free trade zone is exploring relaxation of service industry access. In the field of market research, except for radio and television listening and ratings surveys that must be controlled by the Chinese party, restrictions on foreign investment access will be lifted. In the field of social surveys, foreign investors are allowed to invest in social surveys, but the Chinese shareholding ratio is required to be no less than 67%, and the legal representative should have Chinese nationality.

In addition, the description of the Negative List added "foreign-invested enterprises investing in China shall comply with the relevant provisions of the negative list for foreign investment access." In order to link up the Negative List of Foreign Investment Access and Market Access, the "Negative List of Market Access" has been added to the explanation section of the negative list. Also added "domestic enterprises engaged in businesses in the areas prohibited for investment in the negative list of foreign investment access to issue shares overseas and listed for trading shall be subject to review and approval by relevant state authorities. Foreign investors are not allowed to participate in the management of the enterprise, its shareholding ratio shall be implemented in accordance with the relevant regulations on the management of domestic securities investment by foreign investors