Name: Consultation Draft of Revised “Foreign Investment Industrial Guidance Catalogue” 《外商投资产业指导目录（修订征求意见稿）》
Issuing authority: National Development and Reform Commission and Ministry of Commerce
Consultation period: Ends on 30 April 2011
Subject: Foreign Investment
The National Development and Reform Commission (“NDRC”) and Ministry of Commerce (“MOC”) have taken another step towards further opening up the Chinese market to foreign investment, with the publication of draft revisions to the 2007 Foreign Investment Industrial Guidance Catalogue. Particular emphasis has been given to foreign investment in high technology industries, high end manufacturing, energy conservation and environmental protection, and modern services, with an upgrading of certain industries to “encouraged” status. Conversely, certain industries are proposed to be downgraded from “encouraged” to “permitted” or “restricted”, or in some cases to “prohibited”.
The draft rules are open for public consultation until 30 April 2011.
Highlights
Highlights of the proposed revisions to the Catalogue include:
New encouraged sectors
- Development in respect of energy conservation technologies, recycling of various products (including plastics, electronic products, automobiles, electromechanical equipment, rubber, metal and batteries), and manufacture of key components and parts for new energy automobiles have been promoted from “permitted” to “encouraged”. Foreign investment in the automobile sector remains capped at 50%, however.
- Venture capital enterprises have been upgraded from “permitted” to “encouraged”, a clear sign of China’s intention to encourage foreign investment in this sector.
- Intellectual property service institutions, such as patent and trademark agents and intellectual property consulting companies, are upgraded from “permitted” to the “encouraged” category.
- Vocational education and training is to be included in the “encouraged” category.
New permitted sectors
- As part of China’s efforts since its access to the World Trade Organization to gradually open up its financial services sector to foreign investment, financial leasing companies are to be upgraded from the “restricted” category to “permitted”.
- Commodity auction services are to be upgraded from “restricted” to “permitted”.
- Manufacturing of carbonated soft drinks is to be moved from “restricted” to “permitted”.
- Commercial companies engaging in franchise or commission business or business management are to be upgraded from “restricted” to “permitted”. Conversely, commercial companies engaging in mail order or direct or online sales will remain in the “restricted” category.
- Medical service institutions are to be promoted to “permitted” from the “restricted” category.
- Distribution and import of books, newspaper and magazines and importing of audio and visual products and electronic publications are to be upgraded from the “prohibited” category to the “permitted” category.
New restricted or prohibited sectors
- Manufacturing of complete automobiles is to be downgraded from “encouraged” to “permitted”. Foreign investment in this sector will remain capped at 50%.
- Mail courier services within China are to be moved from the “permitted” to the “restricted” category.
- Consistent with the Chinese authorities’ efforts to cool down the real estate market, construction of villas is to be downgraded to “prohibited” from “restricted”.
If you would like to discuss anything regarding this Alert please contact Fang Jian (Shanghai), Nicola Mayo (Shanghai), Simon Poh (Shanghai), or Betty Yap (Hong Kong).
