The National Development and Reform Commission and the Ministry of Commerce recently announced the Catalogue for the Guidance of Foreign Investment Industries (Revised in 2015), which will take effect on April 10, 2015.

The revision was the most open of all previous amendments since China enacted the “Catalogue” in 1995. The number of restricted items has been reduced from 79 items in the 2011 Catalogue to 38 items. Experts believe that the revision of the list will promote a new round of opening up to the outside world, build a more open and transparent foreign investment environment, and at the same time prompt China to adapt to changes in its role and actively promote openness to promote international investment cooperation.

The general manufacturing industry is basically liberalized and promoted by the competition to promote the level of the industry

The 2015 edition of the Catalogue basically liberalized the general manufacturing industry, eliminating the steel, ethylene, oil refining, papermaking, lifting machinery, ship cabin machinery, power transmission and transformation equipment, coal chemical equipment, light helicopters, automotive electronics integration systems, and famous liquors. Equal share ratio requirements, non-ferrous metal smelting, small construction machinery, ordinary bearings, photographic materials, chloramphenicol, etc. are no longer included in the restricted category.

Wang Yiming, former secretary-general of the National Development and Reform Commission, said that in the past 30 years, the overall competitiveness of China's manufacturing industry has greatly improved, and it has leapt to the world's largest exporter of manufactured products, thanks to a comprehensive and in-depth experience. Open to the outside world. The introduction of foreign investment is not only the introduction of funds, but more importantly, the introduction of advanced technology and management experience to promote competition and improve the level of industry development.

“At present, China’s manufacturing industry is facing multiple challenges. The pattern of global regional economic integration is changing. Developed countries are promoting the 'reindustrialization' strategy and developing countries’ low-end diversion, and China’s need to introduce new capital, talent, Technology, accelerating the pace of transfer and upgrade, upgrading China's position in the global industrial chain and value chain from the future development of the manufacturing industry, and strengthening China's discourse power in the formulation of global rules and standard setting.” Minister of Foreign Economic Research, State Council Development Research Center Zhao Jinping said.

In the revision of this catalogue, 76 items were revised in the encouraged category, mainly adjusting indicators and optimizing the structure, and promoting foreign investment in the use of new technologies, new processes, new materials, and new equipment to further improve the quality of foreign investment.

For the opening of the general manufacturing industry may affect the concerns of local companies, Zhao Jinping said that China's manufacturing companies have a localized competitive advantage, in certain areas with the conditions of competing with multinational companies on the same platform, has a strong ability to resist risks. The process of expanding access to foreign investment is the process of survival of the fittest and can be used to enhance the competitiveness of enterprises. For some companies that may face bankruptcy and closure risks, the state should improve the industrial relief system and provide transitional arrangements.

Transforming the Management of Foreign Capital and Constructing an Open and Transparent Investment Environment

According to the requirements of the negative list management model, the 2015 edition of the “Catalogue” allows, in principle, no more restrictions on foreign-invested shares than permitted for all types of projects. All foreign-invested share ratios are specified in the “Catalogue”. The number of "joint ventures and cooperation" items has been reduced from 43 in the 2011 edition of the "Catalogue" to 15, and the number of "Chinese party holdings" items has been reduced to 35.

Zhao Jinping said that in the revision of this list, China has intensified the reform of the negative list management model, reduced the number of negative list entries, gradually reduced the areas covered by the industry, and was more open and positive.

“China has further promoted the opening of the first, second and third industries, and focused on expanding service industries and opening up of general manufacturing industries. Copy and promote the pilot experience of the China (Shanghai) Pilot Free Trade Zone,” said Wang Yiming. In order to adapt to the new situation of China's reform and development and economic globalization, the 2015 edition of the Catalogue encourages foreign investors to invest in modern agriculture, high technology, advanced manufacturing, energy conservation and environmental protection, new energy, and modern service industries.

Zhao Jinping said that China will continue to make efforts in accordance with the requirements of the negative list management model. In the complete negative list in the future, the categories of encouraged and permitted categories may not be listed, and the categories of restricted categories will continue to be shortened.

Actively Expand Openness and Promote International Investment Cooperation

In terms of attracting foreign investment, China's efforts to attract foreign investment have shifted from the previous pattern of manufacturing to service-based, and the scale of foreign investment in service industries has continued to expand. According to the 2015 edition of the “Catalogue,” in the service industry, it is mainly to cancel or relax the equity requirements for e-commerce, chain operations, feeder railways, subways, light rail, sea transport, and performance venues, and direct product, mail order, import and export commodity inspection and certification, Railway freight transportation, insurance brokerage companies, financial companies, trust companies, currency brokerage companies, etc. are no longer included in the restricted category, and architectural design and pension institutions are included in the encouraged category.

The new round of reform and opening up requires China to use a global perspective to allocate resources. Zhang Yansheng, secretary general of the Academic Committee of the National Development and Reform Commission, said that some Chinese enterprises have gone out to invest in real estate and finance. This requires that China's opening up pattern be linked to international high standards.

China’s two-way investment was approaching its balance for the first time in 2014. According to the data from the Ministry of Commerce, in addition to the refinancing of third-party financing, the scale of China’s foreign investment in 2014 was around US$140 billion, which was US$20 billion higher than China’s use of foreign capital in 2014. China's foreign direct investment industry covers a wide range of industries, covering 15 major categories: leasing and business services, mining, wholesale and retail, construction, manufacturing, real estate, transportation, warehousing and postal services.

“China is changing from a capital-importing country to a capital-exporting country and increasing foreign investment. This also requires us to adapt to changing roles and to actively and openly promote international investment cooperation,” said Wang Yiming.

"China's foreign investment laws and regulations must not only consider the introduction of foreign investment, but also consider going out. A fair and transparent legal platform can create more overseas opportunities for Chinese companies to go global." Zhang Yansheng said.

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