On 8 September 2024, China’s National Development and Reform Commission and the Ministry of Commerce jointly released the Special Administrative Measures (Negative List) for Foreign Investment Market Access, 2024 Version (referred to as “Negative List 2024”). This new regulation will take effect on 1 November 2024, replacing the previous version that was implemented on 1 January 2022.
Notably, the Special Administrative Measures (Negative List) for Foreign Investment Market Access to Pilot Free Trade Zones (FTZ Negative List), which governs foreign investments in designated free trade zones, has not been updated alongside the Negative List 2024. The existing FTZ Negative List, effective since 1 January 2022, remains in force for the time being.
Since 28 July 2017, the People’s Republic of China (PRC) has used a nationwide negative list framework to regulate foreign investor market access. This means foreign investment is generally allowed unless the specific project or entity is listed as restricted or prohibited. Under the Negative List 2024, the number of restricted items has decreased from 31 to 29, reflecting a shift towards greater openness.
Two significant restrictions in the manufacturing sector have been lifted:
The requirement that “for the printing of publications, the controlling stake must be held by the Chinese party” has been abolished.
The ban on “investment in the application of steaming, stir-frying, moxibustion, calcination, and other processing techniques for Chinese herbal medicines, as well as the production of confidential prescription products of proprietary Chinese medicines” has also been removed.
As a result, access to the manufacturing sector is now unrestricted, granting equal treatment to domestic and foreign investments—a notably positive change.
In addition to the Negative List 2024, a joint circular issued on the same date by China’s Ministry of Commerce, the National Health Commission, and the National Medical Products Administration aims to further open the PRC’s healthcare sector to foreign investments. This initiative permits the establishment of wholly foreign-owned hospitals in select cities, including Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and Hainan. It also encourages foreign enterprises to engage in biotechnology within designated free trade zones.
Through these changes, the Negative List 2024 and the related circular are expected to further reduce restrictions and prohibitions on foreign investments.
However, certain key areas still face restrictions. These include:
Foreign investments in the exploration, mining, and beneficiation of rare earths, radioactive minerals, and tungsten.
News agencies and the editing, publishing, and production of books, newspapers, periodicals, audio-visual products, and electronic publications.
All broadcasting stations, television stations, radio and television channels, and the video-on-demand business related to radio and television.
Film production companies, distribution companies, and cinema operations.
Other restricted industries encompass domestic water transport, public aviation transport, telecommunications, the construction and operation of nuclear power plants and civilian airports, market surveys, educational institutions, medical institutions, and the breeding and production of new wheat and corn varieties.
In conclusion, the ongoing trend of reducing restrictions on foreign investment in the PRC is undoubtedly positive and may create new opportunities for foreign investors. Nevertheless, as long as a negative list system remains in place, achieving complete national treatment for foreign investments will be challenging. There is hope for further reductions in existing restrictions in the near future.
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