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On 28 June 2017, the 7th version of Foreign Investment Catalogue (Chinese) was jointly promulgated by National Development and Reform Committee (NDRC) and Ministry of Commerce (MOFCOM), which will take effect on 28 July 2017.

 

Compared with 2015 Catalogue, the major changes in the 2017 Catalogue are:

 

Nationwide Negative List mechanism introduced

 

The previous catalogs set out lists of encouraged, restricted, and prohibited sectors. The latest 2017 Catalogue includes the list of encouraged sectors but also introduces Special Administrative Measures for Foreign Investment (also known as the “Negative List”), which combine restricted and prohibited sectors as well as sectors which are encouraged but subject to requirements for equity percentage /senior management qualifications.

 

The trial implementation of the “Negative List” mechanism was launched back in 2015 in the four Pilot Free Trade Zones. The promulgation of the 2017 Foreign Investment Guidance Catalogue also marks China has officially implemented the “Negative List” mechanism nationwide.

 

Foreign investment into permitted and encouraged sectors now only requires a simplified on-line “record-filing”. However, foreign investment into sectors in the “Negative List”, the “approval” mechanism will be applicable, meaning an application needs to be submitted to the Ministry of Commerce for examination and approval.

 

Further opening-up of the market

 

Compared to the 2015 Catalogue, the 2017 Catalogue does not add any new restricted or prohibited sectors. Instead, it reduces the number of restrictive measures from 93 to 63, signaling the further opening-up of the service sector, the manufacturing industry, and the mining industry:

 

Service Sector

 

Canceled are the restrictive measures for road passenger transport companies, ocean shipping tally companies, credit investigation and rating service companies, accounting and auditing, construction and the operation of large-scale agricultural products wholesale markets

 

Manufacturing industry

 

Now allowed are the manufacturing of track transportation equipment, automobile electronics, new energy automobile batteries, motorcycles, processing of edible oil and fats, fuel ethanol, etc. The restrictions on the manufacturing of electric vehicles have also been relaxed.

 

Mining Industry

 

Now open is the exploration and exploitation of unconventional oil and gas (ie. shale gas), precious metals, exploitation, and ore dressing of lithium mines, etc.. Meanwhile, the 2017 Catalogue adds the below entries into the encouraged category: special medical purpose food formula, Virtual Reality (VR) / Augmented Reality (AR) devices, key parts, and components of 3D printing equipment, city parking facility, etc.

 

To sum up, with the promulgation of the new Catalogue, together with the new “Negative List” for Pilot Free Trade Zones published on 5 June 2017, the central government aims to attract more foreign investors, improve the overall investment environment and promote innovation, modernization and the upgrading of China’s industrial structure.

 

ECOVIS Beijing is a Sino-German consultancy focusing on accounting, audit, legal and tax advisory for foreign SMEs and startups in China. Our international team has also over 10 years of experience in helping foreign businesses entering the Chinese market. If you have further questions regarding the Chinese recycling sector and market conditions, please do not hesitate to contact us via This email address is being protected from spambots. You need JavaScript enabled to view it..

 

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Richard Hoffmann

Richard Hoffmann is a partner at ECOVIS Beijing China. Richard obtained an honors degree in law and worked in Germany, the United States, and China for various prestigious law firms prior to joining ECOVIS. In addition to being a member of the board of ECOVIS International, he is Supervisor for the China business of a respected German company and shares his extensive knowledge to students by teaching commercial law in China at SRH Hochschule Heidelberg. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV stations. Contact: This email address is being protected from spambots. You need JavaScript enabled to view it.

Ecovis Beijing is the trusted tax and legal advisor to several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up for our Newsletter, give us a call +86 (10) 6561 6609 or contact us directly via This email address is being protected from spambots. You need JavaScript enabled to view it.
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