The National Development and Reform Commission (“NDRC”) and Ministry of Commerce (“MOC”) have recently published the 2011 Foreign Investment Industrial Guidance Catalogue (“2011 Catalogue”), which amends the previous version of the Catalogue published in 2007. The key aspects of the 2011 Catalogue are:
- Particular emphasis is given in the 2011 Catalogue to foreign investment in high-technology industries, high-end manufacturing, energy conservation, environmental protection and advanced services.
- There is a net gain of 3 industries in the “encouraged” category, making a total of 354 entries in this category of the 2011 Catalogue.
- A net total of 7 and 1 industries have been removed from the “restricted” and “prohibited” sectors respectively, making a total of 80 entries in the “restricted” category and 39 entries in the “prohibited” category of the 2011 Catalogue.
- The number of industries in the 2011 Catalogue which are subject to restrictions on foreign ownership has been reduced by 11.
- To encourage the migration of foreign investment in the relatively labour-intensive industries from the coastal regions to the hinterland, some of the “encouraged” entries deleted from the 2011 Catalogue will be added to the to-be-revised Catalogue of Priority Industries for Foreign Investment in Central and Western China (中西部地区外商投资优势产业目录), which was last amended in 2008.
Examples of the new industry classifications under the 2011 Catalogue include:
- Key sectors where foreign ownership restrictions have been removed
- Production of natural food additives and condiments
- Production of paper-rolled tobacco and tobacco filters
- Production of ethylene (with an annual production capacity of over 800 thousand tons) and large-scale coal chemical products
- Manufacture, research and development of accelerators, nickel-hydrogen and lithium-ion batteries and related control systems, integrated electric motors and related control systems, wheel hub motors, multi-functional controllers, fuel cell stacks and hydrogen storage systems for automobiles
- Design and manufacture of rockets for civilian use
- Design of luxury cruisers and deep water engineering equipment for a depth of 3000m or below
- Manufacture of complete sets of equipment or key equipment for generating electricity using alternative sources
- Processing of soybean oil and rapeseed oil
- Manufacture of wheeled or crawler cranes of below 400 tonnes
- Distribution of non cinematic audiovisual products in cooperation with domestic investors (domestic majority ownership is not required)
- Key sectors which have been added or moved to the “encouraged” category
- Manufacture of bearings used in wind turbine generators (being the main bearings, accelerator bearings and power generator bearings used in wind turbines of capacity 2MW and above), and the aerospace industry (being the main bearings, take-off and landing bearings, traditional system bearings and control system bearings used in aerospace engines)
- Manufacture of equipment used to prevent atmospheric pollution, such as heat-resistant and anti-corrosive filters, low NOX-emitting combustive devices, industrial waste gas, diesel and heavy metallic waste gas purifiers
- Manufacture of equipment used to prevent water pollution, such as horizontal spiral centrifugal dehydration machines, membranes, membraneous materials, ozone generators and ultraviolet sterilizing equipment
- Manufacture of equipment used to prevent solid waste pollution, such as equipment used to dispose of contaminated soil and to recycle materials in waste water treatment plants, refuse furnaces with a daily processing capacity of 500 tonnes and above, refuse levelling equipment, and equipment for the disposal of hazardous waste and scrap steel
- Manufacture of equipment for the recycling of marine oil spills
- Manufacture of key components and parts for new energy automobiles
- Manufacture of key ancillary equipment used in hydropower generation turbines
- Manufacture of large scale pumped storage power generators with a capacity of 350MW and above
- Venture capital enterprises
- Oil palm cultivation
- Vocational training
- Recycling of construction waste
- Technology for the clean-up of marine oil pollution and restoration of marine habitats, prevention of eutrophication, prevention of disasters from uncontrolled, growth of marine organisms, and restoration of coastal habitats
- Manufacture of new-breed vaccines, such as for ovarian cancer, malaria and hand-foot and mouth disease
- Touch-controlled systems (touch screens, touch modules etc.)
- Manufacture of machinery for office use (multifunctional integrated office equipment (copy, print, fax and scan), colour printing equipment, high-resolution colour printer heads of 2400dpi or above, and photosensitive drums)
- Manufacture of machinery for movie use (2k and 4k digital cinematographs, digital film cameras, digital video and editing equipment)
- Recycling of scrap electrical appliances, automobiles, electromechanical equipment, rubber, metals and batteries
- Key sectors which have been added or moved to the “permitted” category
- Financial leasing companies
- Large-scale coal chemical production
- Contraceptive devices
- Production of polysilicon
- Production of carbonated soft drinks
- Wholesalers and retailers engaging in franchises, agency businesses or business management (however, mail order, direct and online sales remain in the “restricted” category)
- Healthcare institutions
- Distribution and import of books, newspapers and magazines
- Import of audiovisual products and electronic publications
- Manufacture of automobiles (foreign investment in this sector remains capped at 50%)
- Key sectors which have been added or moved to the “restricted” category
- Processing of rice and flour
- Manufacture of vaccines listed in the state immunisation plan
- Processing of palm, peanut, cottonseed, tea, sunflower and other edible oils
- Key sectors which have been added or moved to the “prohibited” category
- Mail courier services within mainland China
- Construction of villas
Reference: 2011 Foreign Investment Industrial Guidance Catalogue (外商投资产业指导目录(2011))
Issuing authorities: NDRC and MOC
For further information regarding this Alert please contact Fang Jian, Teresa Ma or Simon Poh.
