By the end of June 2018, the regime of foreign investment in China has met two significant changes. One is a shortened Negative List for Foreign Investments (the “2018 Negative List”) jointly released by National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) which becomes effective on July 28, 2016; the other one is the promulgation of the revised Interim Administrative Measures for the Record-filing of the Incorporation and Change of Foreign-invested Enterprises (the “2018 Interim Measures”) by MOFCOM which takes effect on 30 June 2018. The two changes have signified China’s firm determination on attracting more foreign investments by further opening-up to the world, and simplifying the governmental formality.
The 2018 Negative List – Opening-up Market Access
The Negative List includes a list of industries in which foreign investment is either prohibited or restricte0d. Restricted industries usually require investment through joint ventures with Chinese companies. For industries which are not included in the List, foreign investors are basically given equal treatment to domestic Chinese investors. Compared to the Negative List issued in 2017, the 2018 Negative List has a significantly reduced number of restrictive measures, from 63 to 48. Recent announcements of an opening in the financial services, agriculture, shipbuilding, aircraft manufacturing and auto sectors have now been reaffirmed in official documents.
A summary of the key opening-up measures for the 2018 Negative List can be found in the list below.
3.2 Shipbuilding industries
3.3 Aviation manufacturing
3.4 Manufacturing of weapons
4. Wholesale and retail industries
4.2 Gas station
5. Transportation, warehousing and postal service industries
6. Financial Industry
7. Scientific research and technological services industries
8. Cultural Entertainment
The 2018 Interim Measure – “One Window, One Form”
The release of 2018 Interim Measures mainly serves as a further enactment and confirmation of the simplified registration formality reform for foreign-invested enterprises – “One Window, One Form” – as put forward earlier this year on February 28 in the Circular jointly issued by MOFCOM and the State Administration for Industry and Commerce (SAIC). According to the Interim Measures, starting form 30 June, 2018, a foreign investor is able to incorporate a foreign-invested enterprise (FIE) by filling in one single form, electronically submitted, to one government office, insofar as the industry he invests in does not fall into the 2018 Negative List as introduced above. This means that a foreign investor no longer needs to go through the procedures with MOFCOM (i.e. record-filing of setup) and SAIC (i.e. registration of setup) separately. Which previously meant filling in the same information repeatedly. Furthermor the new process will be realized as fully “paperless”, “no on-site presence”, and “free of charge”. It is believed that this new reform introduced will generally improve the service effectiveness and streamline the registration procedure, which in turn will reduce the burden of foreign investors.
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