China Further Opens Market Access for Foreign Investors

For decades foreign investment into China has been subject to approval by the competent Authority of Commerce and registration with the competent Administration for Industry and Commerce. Also, not all industry sectors were open to foreign investment. The Guideline Catalogue of Foreign Investment Industries (“Guideline Catalogue”) distinguished between industry sectors, in which foreign investment was encouraged, permitted, restricted and prohibited. The Guideline Catalogue also stipulated whether in a certain sector wholly foreign-owned enterprises (“WFOEs”) are allowed or only joint ventures were possible and whether in joint ventures the Chinese shareholders must have majority or controlling shares. Recently, the above system has been gradually reformed and China moved to the so called negative list approach, i.e. the approval requirement has been abolished and foreign investment is now only subject to recordal at the competent Authority of Commerce and registration with the competent Administration for Industry and Commerce, unless the project (both green-field investments and acquisitions) falls into industry sectors which are listed in the so called Negative List. In case of the latter, the project remains subject to approval by the competent Authority of Commerce.  There are different Negative Lists for free trade zones (“FTZ”) and for areas outside of FTZs. To read the details, please click "Read more" below.