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Foreign Investment in China

Direct Foreign Investment in China


Summary

 

China has released a newCatalogue for the Guidance of Foreign Invested Industries. The catalogue is a legal document listing what industries are open for foreign investors. It has been revised and re-released many times since its creation in 1995. The new edition is the 7th version since the catalogue’s inception. The official 2017 catalogue was published on the 28th June 2017 and extended nationwide on the 28th of July 2017. Through the catalogue,several industries are becoming more deregulated and opened up for foreign investors. These deregulations involve removing shareholding limits or nationality requirements for partners on certain sectors for foreign investors as well as changing some restricted industries to permitted industries. The 2017 catalogue is structured into two categories; the ‘Encouraged’ category and the ‘Special Administrative Measures for the Entry of Foreign Investment’ (Negative List). The Negative List is split into two parts; restricted and prohibited.

 

·          PRC Parties control means that the company must be controlled by Chinese nationals.


·         Shareholding limit means that restrictions are placed on the percentage of the company a foreigner can own. This may              vary depending on industry.

 

·           Nationality requirement means that one major partner of a firm must have Chinese citizenship

 

·           Restricted catalogue entries mean that foreign investors may face additional restrictions when investing in these                         industries.

 

·           Permitted catalogue entries mean that foreign investors may take part in these industries with no additional                             restrictions or assistance. Every industry that is neither illegal in China nor mentioned in the

 

The Catalogue for the Guidance of Foreign Invested Industries falls under the permitted category.

 

·           Encouraged catalogue entries mean that these industries may be eligible for incentives or preferential treatment.

 

·           Prohibited industries are off limits to investors

·          Encouraged and Restricted catalogue entries means that foreign investors may see the benefits offered by PRC but                 are also subject to certain regulations and restrictions

 

Changes in the Catalogue from 2015 version to revised 2017 version are listed below;

 

Catalogue entries changed from restricted to permitted

 

·         Exploration and mining of precious metals (gold, silver, platinum)

 

·         Lithium mining and mineral processing

 

·         The processing of Soybean oil, rapeseed oil, peanut oil, cottonseed oil, tea seed oil, sunflower oil, palm oil and                 other edible oils (PRC parties control) rice, flour, raw sugar processing and deep corn processing

 

·         Production of bio-fuels such as ethanol and biodiesel (PRC parties control)


·         Highway passenger transportation


·         Ocean shipping tally (limited to equity/cooperative joint ventures)




·         Credit investigation and rating services

 

·         Motorcycle manufacturing

 

Catalogue entries with shareholding limit removed

 

·         Mine gas utilization (limited to equity/cooperative joint ventures)

- remained in encouraged category

 

·         Rail transport equipment (limited to equity/cooperative joint ventures)

- changed from encouraged to permitted category

 

·         Manufacture and repair of marine engineering equipment (including models) (PRC parties control)

- changed from encouraged to permitted category

·         Manufacture of low and medium speed diesel engines and crankshafts for ships (PRC parties control)

 

- changed from encouraged to permitted category

·         Design and manufacture of civil satellite; manufacture of civil satellite payload (PRC parties control)

- remained in encouraged category

 

·         Comprehensive water conservancy project construction, operation (PRC parties control)

- changed from encouraged to permitted category

 

·         Manufacturing and R&D of automobile electronic bus network technologies

– remained in encouraged category

 

·         Manufacturing and R&D of electronic controllers for electric power steering systems

– remained in encouraged category

 

·         Manufacturing of automobile batteries

– changed from encouraged to permitted category

 

Catalogue entries with nationality requirement removed

 

·         Accounting and Auditing

- changed from encouraged (with restrictions) to permitted category





If you want more details, please click the link.

Foreign-Investment-in-China-6-201709015.pdf


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