Nationwide negative list to spur foreign investment

2017-09-25
Xinhua

BEIJING — China will roll out a negative list for foreign investment, which has been tested in pilot free-trade zones.

The negative list model, which states the sectors and businesses that are off limits to foreign investment, will be adopted nationwide as early as 2018.

“Introduction of the negative list is a creative approach at home and abroad. It lays an important foundation for market to play a decisive role in resource allocation,” said Xu Shanchang, with the National Development and Reform Commission.

The approach had an initial test run in Shanghai, Tianjin, Guangdong and Fujian, before expanding to other places, including Zhejiang and Hubei, for further testing.

“It is rather important to be prepared before making it a nationwide practice,” Xu said.

On Aug 16, the State Council issued a document saying that China would make its foreign investment environment “more law-based, internationalized and convenient” to promote growth and raise the quality of foreign investment.

“The country should continue to reduce market access restrictions for foreign capital,” the document said.

China will expand market access to allow foreign capital in sectors including new-energy vehicle manufacturing, ship design, aircraft maintenance and railway passenger transport, it said.

On July 28, China began to implement a revised foreign investment catalogue, which included a negative list as well as sectors and industries in which the government wants to encourage foreign companies to invest.

“Instead of trying to guide industrial adjustment, the negative list is to coordinate the relationship between government and market, aiming to improve the market’s role of regulation, make enterprises the major investment sources and lift government restrictions,” said Guo Guannan, with China Academy of Macroeconomic Research.

“The resilience and competitiveness of China’s investment management system would be enhanced by implementing a negative list,” said Gao Yuwei, a Bank of China researcher.

The negative list will help China develop an open economy and lead to comprehensive reforms to the country’s economic and social management, according to Gao.

China will introduce more fiscal and taxation support policies to encourage overseas investors to expand investment, the State Council said in August.

The country could make use of overseas investors to optimize the service trade structure.

China encourages multinationals to set up regional headquarters in the country and wants more investment in western areas and the old northeastern industrial bases.

The investment environment in national-level development zones will be improved by giving the zones more authority in investment management and raising their ability to provide industrial services, according to the State Council.

Foreigners will find it easier to get work permits as the government aims to facilitate the cross-border flow of professionals.

Before the end of the year, China will release detailed new rules for granting visas to foreign professionals, including extending the validity period, the State Council said.

Efforts should also be stepped up to improve foreign capital-related laws, provide better services to overseas investors and ensure the free outward remittance of their profits.

China will improve the protection of intellectual property rights, raise the competitiveness of the research and development environment and maintain continuity in foreign investment policies, it said.