Beiten Burkhardt

China: China Further Opens Door for Foreign Investors in Many Industries

The laws and regulations governing the foreign direct investment regime in China are a tool for steering foreign investments. Based on China’s WTO commitments and policy considerations, the laws and regulations and also their interpretation and practical application are subject to change over time. The main tool for this policy-based steering of foreign investment is the so-called “Industrial Guidance Catalogue for Foreign Investment” (“Catalogue”), which classifies industry sectors into different categories. Whether or not a particular sector is open to foreign investment depends on how it is categorised. The latest version of such Catalogue was jointly issued by the National Development and Reform Commission (“NDRC”) and the Ministry of Commerce (“MOFCOM”) and took effect on 28 July 2017 (“2017 Catalogue”). In the 2017 Catalogue, industry sectors are divided into two categories, namely the “encouraged” projects and projects falling under the regime of the “Special Management Measures for the Market Entry of Foreign Investment” (“Negative List”), with such Negative List containing two separate sub-sections of restricted projects and prohibited projects. Industry sectors not mentioned in the encouraged category or in the Negative List are considered permitted for foreign investment. The Negative List also helps foreign investors to determine whether an investment project is subject to the traditional MOFCOM examination and approval procedure (projects within such list), or is instead “only” governed by the simplified record-filing regime.