China updates negative list and encourages sector catalogue for foreign investments: a step in the right direction

On 30 June 2019 the National Development and Reform Commission and the Ministry of Commerce jointly released the Special Administrative Measures (Negative List) for Foreign Investment Market Access (2019 Version) (the Negative List), the Special Administrative Measures (Negative List) for Foreign Investment Market Access in Pilot Free Trade Zones (2019 Version) (the FTZ Negative List) and the Encouraged Foreign Investment Industry Catalog (2019 Version) (the Encouraged Catalog).

All of which will replace their respective predecessors and become effective upon 30 July 2019. These developments are essentially the Chinese government delivering on its promises to further liberalize foreign investment. After the release of the new PRC Foreign Investment Law (the "FIL") in this March (which will take effect from 1 January 2020), Premier Li Keqiang indicated at the Boao Forum for Asia on 28 March 2019 that the supporting legislation for the FIL will be completed by the end of 2019, and China will further reduce the number of items on the negative list and liberalize foreign investment in the fields of modern service industries, such as value-added telecommunications, medical institutions and educational services, transportation, infrastructure, energy resources, and so forth. The release of the Negative List, FTZ Negative List and Encouraged Catalogue goes some way towards this, although it could be argued that some of the changes do not go far enough.

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