The release of a new negative list fulfills China's promise to further open up. Sectors such as services and finance will see more market openings while others related to national security will remain under government control, experts said on Friday.
Chinese authorities on Thursday released a new negative list, which identifies sectors which prohibit or limit foreign investments, and the number of items subject to special administrative measures was cut from 63 to 48, according to the document posted on the National Development and Reform Commission (NDRC) website.
The list scrapped shareholder ratio requirements for banks and lowered ratio requirements for securities, insurance and futures companies. The list also eliminated restrictions on the shareholder ratio for new-energy vehicles, and provided a road map for the further opening-up of the auto industry.
"For example, the new list will remove the shareholder ratio for foreign passenger vehicle manufacturers by 2022, which shows that the country will open its door wider to foreign investors not only for now but also in the future," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times.
Also, it grants more market access to foreign investors, as the new list allows them entry into new sectors such as grapheme mining, Bai noted. Grapheme is a semi-metal widely used in the auto industry.
The new list also eliminates restrictions on other sectors, including shipping, aircraft design, manufacturing and maintenance, which reflects a full-scale market opening-up, the Chinese Ministry of Commerce (MOFCOM) said on Friday.
China's recently updated foreign investment negative list is a positive movement toward a bilateral economic relationship built on reciprocal treatment, William Zarit, chairman of the American Chamber of Commerce in China, told the Global Times on Friday.
Market openings for banks, insurance companies and automobile manufacturers had been announced, though they have since been formalized and in some cases accelerated, Zarit said.
He added that removing some investment barriers in the railway, shipping, and power sectors also shows that China is attempting to demonstrate it is indeed opening up.
Since the start of the year, the Chinese government has come up with measures to encourage foreign investments, MOFCOM said.
From January to May, the number of newly established foreign enterprises grew 97.6 percent and FDI increased 3.6 percent, both on a year-on-year basis, the authority said.
"The new list did not come out of nowhere. The Chinese government has already pledged to open up more to foreign investors and had tried some of those measures in [the country's] free trade zones," Bai said.
While some foreign business organizations expressed concern over China's tough business environment, a shortened negative list proves that the business environment is becoming more favorable to foreign investors, Sang Baichuan, a professor at the University of International Business and Economics in Beijing, told the Global Times.
"We attach greater importance to foreign investments in some sectors like high tech and services, especially amid China's consumption upgrade," he said.
The new list largely relaxed market access to the services, manufacturing, agriculture and energy sectors, the NDRC said on its website. It also eliminated restrictions in various industries, including railway, power grid, transport and gas stations. "As the world's second largest economy, China is not afraid to bring in more competitors to boost the growth of its industries," Bai said.
While some sectors such as aircraft design and rail network construction are now open to foreign investors, others like telecommunications, mapping, arms manufacturing and the internet remain restricted, the list shows.
"Areas related to national security are not open to foreign investments," Sang said, adding that they also involve military and economic security.
Industries that have natural monopolies and provide important public services will remain controlled by Chinese entities, but some areas will see accelerated openings, which other countries also practice, the expert noted.
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