In 2013 when China released the first version of the Special Administrative Measures on the Entry of Foreign Investment into China (Shanghai) Free Trade Zone (the "Negative List" for short), the degree of opening was lower than expected. However, in the latest policy frameworks published by the State Council, the Chinese government not only expanded the geographic area of Shanghai FTZ and established three new FTZs in Tianjin, Guangdong and Fujian, but also officially reduced the number of administrative measures in the Negative List to 122 in 2015, down from 139.
According to MIC (Market Intelligence & Consulting Institute), a Taipei-based ICT research institute, the reduction is particularly significant for the manufacturing sector. Aside from cutting down 17 measures, the 2015 version of the Negative List features a more comprehensive catalogue of sector.
2014, 2015 Negative Lists for Manufacturing & Financial Industries
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Industry
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2014
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2015
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Manufacturing
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1. Farm and sideline food processing
2. Alcohols, drinks, and refined tea manufacturing
3. Tobacco products manufacturing
4. Printing and reproduction of recorded media
5. Culture and education, arts and crafts, sports and entertainment products manufacturing
6. Oil processing, coking, and nuclear fuel processing
7. Chemical raw material and chemical product manufacturing
8. Pharmaceutical manufacturing
9. Non-ferrous metal smelting and rolling processing
10. General equipment manufacturing
11. Specialty equipment manufacturing
12. Automobile manufacturing
13. Rail, vessel, aviation and other transportation equipment manufacturing
14. Electrical machinery and material manufacturing
15. Computers, communications equipment and other electronics manufacturing
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1. Aviation manufacturing
2. Vessel manufacturing
3. Automobile manufacturing
4. Rail transportation equipment manufacturing
5. Communications equipment manufacturing
6. Mineral smelting and rolling processing
7. Pharmaceutical manufacturing
8. Other manufacturing
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Finance
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1. Monetary financial services
2. Capital market services
3. Insurance
4. Other financial services
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(The 2015 version does not list the restricted sectors in the financial industry; instead, qualification requirements for financial institutes are listed)
1. Bank stakeholders
2. Bank asset quality
3. Bank equity ratio
4. Foreign banks
5. Futures companies
6. Securities companies
7. Securities fund management companies
8. Securities and futures trading companies
9. Establishment of insurance companies
10. Insurance business
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Source: Special Administrative Measures on Foreign Investment Access into China (Shanghai) Pilot Free Trade Zone, compiled by MIC, June 2015
While the latest version of the Negative List is a welcoming change, Wallace Hsu, senior industry analyst with MIC, cautions that the negative list is not the only regulation foreign investors must comply with.
"Foreign investment in FTZs also has to act in accordance with the Catalogue of Industries for Guiding Foreign Investment, which is the guiding principle on all foreign investment in China," explains Hsu. "No Sino-foreign partnerships are allowed for those fields prohibited or limited to joint venture, cooperation, cooperative joint venture, equity controlled or dominated by the Chinese party, and a certain amount of foreign participation, in the Catalogue of Industries for Guiding Foreign Investment."
Prospective foreign investors are advised to pay more attention to the restricted items, as the inclusion of the Catalogue of Industries for Guiding Foreign Investment in the Negative List will become a major hurdle in the FTZs.
To see more about this report, please visit: Unveiling China Free Trade Zone 2.0
For future receipt of press releases, or more information about MIC research findings, please contact MIC Public Relations.
About MIC
Market Intelligence & Consulting Institute (MIC), based in Taipei, Taiwan, was founded in 1987. MIC is Taiwan's premier IT industry research and consulting firm providing intelligence, in-depth analysis, and strategic consulting services on global IT product and technology trends, focusing on markets and industries in Asia-Pacific. MIC is part of the Institute for Information Industry. https://mic.iii.org.tw/english