With the approval of the Communist Party of China (CPC) Central Committee and the State Council, the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) jointly issued Decree No.23 yesterday, releasing the full text of the Special Administrative Measures (Negative List) for the Access of Foreign Investment (2024 Version), which will come into effect on November 1.
The 2024 version cuts the number of restriction items from 31 to 29, lifting all restrictions in the manufacturing sector.
Number of Restriction Items Reduced to 29
Recent years have witnessed China’s continued efforts to expand foreign investment access. The national negative list and the pilot free trade zone negative list were revised for five consecutive years from 2017 to 2021, reducing the number of restriction items from 93 and 122 to 31 and 27 respectively. A series of major opening-up measures were introduced in the sectors of manufacturing, mining, agriculture, and finance. Notably, in 2021, the pilot free trade zone negative list pioneered zero investment access restrictions in the manufacturing sector.
Compared with the 2021 version, the 2024 national negative list removed the only two restriction items remaining for the manufacturing sector: “For printing of publications, the Chinese party shall have a controlling stake” and “Investment in the application of steaming, frying, roasting, calcining, or other processing technology for prepared Chinese medicinal herb slices and the manufacturing of patented traditional Chinese medicine based on a classified formula shall be prohibited”. The revision cuts the number of restriction items from 31 to 29 and removed all restrictions in the manufacturing sector.
“The manufacturing sector is the earliest to open up in China, characterized by the most competitive market and the deepest integration into the global industrial division of labor and cooperation,” said an official of the NDRC. The official also noted that lifting restrictions in the manufacturing sector demonstrates China’s commitment to expanding international cooperation and clear stance in support of economic globalization. Leveraging its huge market, China encourages exchanges and cooperation between domestic and foreign enterprises to promote high-end, intelligent and green development of the manufacturing industry.
Currently, almost all developing countries impose foreign investment access restrictions in the manufacturing sector. Even some developed economies maintain certain restrictions. According to experts, the removal of the last two restrictions on the list indicates that China has remarkably outpaced other developing countries and even a considerable number of developed economies in the opening-up of the manufacturing industry. This is one of the most vivid manifestations of China fulfilling its solemn pledge that “China’s door of opening-up will only open wider, and will never be closed.”
Revising the Catalogue of Encouraged Industries for Foreign Investment
What future actions will be taken to further open up the service sector after the complete removal of restrictions in the manufacturing sector?
“The high-quality development of the service sector is closely related to people’s well-being, and further opening-up in the sector will help diversify supply,” responded the official. Authorities will continue opening up the service sector so that foreign investment can not only enter China but also thrive in the Chinese market.
Relevant authorities will adopt innovative approaches to widen foreign investment access in the service sector. Since the beginning of this year, industry authorities have launched pilot projects to open up value-added telecommunications and other fields. Moving forward, the NDRC will work with these industry authorities to leverage platforms such as pilot free trade zones and free trade ports to steadily carry out pilot programs in relevant fields. Additionally, foreign investment promotion policies will be further optimized. The NDRC is revising the catalogue of encouraged industries for foreign investment, with one of the key focuses being the inclusion of more items in the service sector to attract greater foreign investment.
Ensuring Equal Regulation over both Domestic and Foreign Investment
The 2024 national negative list will come into effect on November 1. The NDRC, the MOFCOM, and other authorities and regions will work to ensure timely implementation of the list and new opening-up measures in strict accordance with the Foreign Investment Law and its corresponding regulations.
In recent years, China has continuously improved laws, regulations, and market supervision mechanisms, laying a sound institutional foundation for high-level opening-up. For instance, a relatively standardized and mature industry supervision system has been put in place for newly opened sectors. After opening the sectors, foreign businesses will be regulated in the same way as domestic firms, rather than allowing them to run unsupervised in the market, said the official. In this way, foreign investors should comply with the same laws, regulations, regulatory provisions, and industry standards as their domestic counterparts.
The MOFCOM also stated that greater efforts will be made to promote new opening-up measures and closely monitor their effect through foreign-funded enterprise roundtables and other methods. The aim is to ensure that these enterprises are granted national treatment as their Chinese counterparts in fields outside the negative list under the principle of equal treatment for both domestic and foreign businesses. Such efforts will advance reform at deeper levels and high-quality development with high-standard opening-up, and make more foreign-funded enterprises feel reassured about their long-term operation and development in China.
Wholly Foreign-Owned Hospitals Allowed in Pilot Cities Including Beijing
According to the Circular on Implementing Pilot Programs to Further Open up the Medical Sector jointly issued by the MOFCOM, the National Health Commission, and the National Medical Products Administration on September 8, China plans to allow the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and the entire island of Hainan, with the exception of traditional Chinese medicine hospitals and acquired public hospitals.
In the field of biotechnology, foreign-funded enterprises are also permitted, from the issuance date of the Circular, to develop and apply technologies relating to human stem cells, gene diagnosis and treatment in the pilot free trade zones in Beijing, Shanghai and Guangdong, and the Hainan Free Trade Port, for the registration, marketing and production of relevant products. The products registered and approved for market entry and manufacturing can be used nationwide. Pilot foreign-funded enterprises must comply with China’s laws and administrative regulations, meet the standards for human genetic resource management, drug clinical trials (including Multi-regional Clinical Trial), drug registration and market approval, drug production, and ethical review, while adhering to the applicable management procedures.
As required by the Circular, local authorities responsible for commerce, health, human genetic resources, drug supervision and administration in the pilot areas should, in line with their duties, enhance policy promotion, engage with prospective foreign enterprises, and improve services. Meanwhile, authorities should enhance cross-departmental communication to supervise and manage pilot enterprises within the scope of their respective duties, ensuring timely identification and effective prevention of relevant risks. In this way, pilot work on further opening-up in biotechnology and wholly-owned hospitals can be firmly advanced to achieve real results.
(Written by Cao Zheng)
