Analysis of the New Version of the Negative List of Foreign Investment Access and the Similarities and Differences between the Free Trade Zone Version and the National Version of Foreign Investment Access Policy"

Part 1 Preface

On December 27, 2021, the National Development and Reform Commission and the Ministry of Commerce issued the "Special Administrative Measures for Foreign Investment Access (Negative List) (2021 Edition)" and the "Special Administrative Measures for Foreign Investment Access in Pilot Free Trade Zones (Negative List)" (2021 version)", the two negative lists will come into effect on January 1.

In recent years, my country has deepened its high level opening to the outside world and has continuously relaxed foreign investment access. From 2017 to 2020, the national version and the free trade zone version of the negative list were revised for four consecutive years, and the special management measures for foreign investment access were reduced from 93 and 122 to 33 and 30 respectively. major opening measures. The revised 2021 version of the negative list for foreign investment access further shortens the length of the negative list, improves the foreign investment access management system, and improves the accuracy of management. The new version of the national version and the free trade zone version of the negative list were further reduced to 37 and 27, respectively, and the

degree of my country's opening to the outside world has been further improved.

Part II Major Changes in the Negative List for Foreign Investment Access

1> New changes common to the national version and the FTZ version of the negative list:

1. Further opening of the manufacturing sector to the outside world:

(1) The automobile manufacturing industry is fully open to foreign investment. The previous restrictions on foreign shareholding ratios in automobile manufacturing and the restriction that the same foreign investor can only establish two or less joint ventures in China to produce similar vehicle products have been lifted. That is to say, in the auto mobile manufacturing industry, foreign capital enjoys the same national treatment as domestic capital.

(2) Allow foreign capital to enter the industry of "satellite TV broadcasting ground reception facilities and key parts production". "Satellite TV broadcasting ground reception facilities and key parts production" has been deleted from the new negative list, which means that foreign investors can invest in the industry of "satellite TV broadcasting ground reception facilities and key parts production", of course (same as domestic enterprises). must go through the relevant approval procedures before engaging in it.

2. The management of the negative list for foreign investment access has been further optimized.

(1) It is clarified that domestic reinvestment of foreign invested enterprises is still foreign investment. The "Explanation" section of the two new versions of the Negative List has both added an item: "Foreign invested enterprises investing in China (in the Pilot Free Trade Zone) shall comply with the Negative List for Foreign Investment Access ("Foreign Investment in the Pilot Free Trade Zone"). Relevant provisions of the Negative List for Access to Foreign Investment)” indicates that domestic reinvestment by foreign invested enterprises is still foreign investment, and must comply with the relevant provisions of the Negative L ist for Access to Foreign Investment or the Negative List for Access to Foreign Investment in Pilot Free Trade Zones.

(2) Add relevant content to pave the way for the connection between the negative list for foreign investment access and the negative list for market access in the future. Relevant words have been added to the "Explanation" section of the two negative lists, further emphasizing that "the fields outside the negative list shall be managed in accordance with the principle of consistency between domestic and foreign investment. Domestic and foreign investors shall uniformly apply the relevant provisions of the "Market Access Negative List" .” That is to say, foreign investment

enjoys national treatment in areas outside the negative list.

(3) The accuracy of the negative list for foreign investment access has been further improved. In the "Explanation" section of the Negative List, the following content is added: "If a domestic enterprise engaging in businesses in areas prohibited from investment in the Negative List for Foreign Investment Access issues shares overseas and is listed and traded, it shall be reviewed and approved by the relevant competent authorities of the state, and foreign investors shall not participate in the business operation of the enterprise. management, and its shareholding ratio shall be implemented with reference to the relevant regulations on the management of domestic securities investment by foreign investors.” As mentioned by the relevant person in charge of the National Development and Reform Commission on December 27, 2021, when answering a reporter’s question on the new version of the negative list for foreign investment access, domestic The China Securities Regulatory Commission shall lead the supervision of the overseas issuance and listing of enterprises. After a domestic enterprise submits the application materials for overseas listing to the CSRC, if it involves matters such as areas prohibited by the negative list of foreign investment access, the CSRC will seek the opinions of the competent authorities in the industry or related fields, and promote relevant regulatory procedures in accordance with regulations. The China Securities Regulatory Commission and the relevant competent authorities shall implement precise management for overseas listing and financing of domestic enterprises engaged in businesses prohibited by the negative list.

2> New changes unique to the FTZ version of the negative list (different from the national version of the negative list):

1. The free trade zone has achieved full opening to the outside world in the manufacturing sector, and has achieved consistent management policies for domestic and foreign investment.

As mentioned above, in both the national version and the free trade zone version of the negative list, the restrictions on foreign investment in the automobile manufacturing industry and satellite TV broadcasting ground reception facilities and the production of key components have been removed. Since then, the free trade zone version of the negative list has achieved manufacturing The industry entry has been cleared, which means that the free trade zone has achieved a "full" opening to the outside world in terms of manufacturing. (In comparison, in the manufacturing items of the national version of the negative list, there are still "publication printing must be controlled by the Chinese party" and "investment in the application of processing technologies such as steaming, frying, roasting, and calcining of Chinese herbal decoction pieces and the confidentiality of proprietary Chinese medicines are still included. Manufacture of Prescription Products" is a restrictive provision for both items.)

2. The access to foreign investment in the service sector has been relaxed.

(1) In terms of the market research industry, the FTZ version of the negative list cancels the restriction on "market research is limited to joint ventures", but radio and television listening and viewing surveys must still be controlled by the Chinese party.

(2) Regarding the social survey industry, the FTZ version of the Negative List has removed the prohibitive provisions on "prohibition of investment in social surveys". At the same time, it is clearly stipulated: "The proportion of Chinese sha res in social surveys shall not be less than 67%, and the legal representative shall have Chinese nationality." The nationality of the representative is limited.

Part III Comparison of the Free Trade Zone Negative List and the National Negative List

Compared with the national version of the negative list, the free trade zone implements a more open foreign investment access policy. Since the free trade zone shoulders the mission of the "experimental field" of reform and opening up, the level of opening up of the free trade zone is also higher than that of other parts of level of opening up of the free trade zone is also higher than that of other parts of the country. The previous version (2020 version) and the new version (2021 version) the country. The previous version (2020 version) and the new version (2021 version) The new changes in the negative list of the free trade zone, the more open foreign investment access policy in the free trade zone is reflected in the following aspects:

1. In the new corn variety breeding and seed production industries, the national version of the negative list requires that "the Chinese party must be the controlling shareholder", while the free trade zone version of the negative list only requires that "the Chinese party's shareholding ratio should not be less than 34%".

2. In terms of fishery, the national version of the negative list states that "investment in the fishing of aquatic products in the waters under China's jurisdiction and inland waters is prohibited"; however, there is no such restriction in the negative list of the free trade z one, which means that in the free trade zone Foreign capital can enter the aquatic product fishing industry in the waters under China's jurisdiction and inland waters.

3. In the publishing and printing industry, the national version of the negative list requires that "the printing of publications must be controlled by the Chinese party", but there is no such item in the negative list of the free trade zone version, that is to say, investment in the publication printing industry in the free trade zone can be controlled by Foreign holding or even sole proprietorship.

4. In terms of traditional Chinese medicine manufacturing, the national version of the negative list states that “investment in the application of processing technologies such as steaming, s tir frying, roasting, and calcining of Chinese herbal decoction pieces and the production of proprietary Chinese medicine secret prescription products is prohibited”, but in the free trade zone There is no such item in the version of the negative list, which means that foreign capital in the free trade zone can (sole proprietorship or joint venture) invest in the application of steaming, frying, roasting, calcining and other processing technologies of Chinese herbal decoction pieces and the production of proprietary Chinese medicine secret prescription products.

5. In the entertainment industry, the national version of the negative list states that "investment in cultural and artistic performance groups is prohibited". In the negative list of the free trade zone version, it is stated that "theatrical performance groups must be controlled by the Chinese side", which means that foreign investment in cultural and artistic performance groups is allowed in the free trade zone, but it must be controlled by the Chinese side.

6. Regarding the market research industry, the old version of the negative list still retains “market research is limited to joint ventures, and radio and television listening and viewing surveys must be controlled by the Chinese party.” This restriction, restriction, In the new version of the FTZ version of the negative list, the restriction In the new version of the FTZ version of the negative list, the restriction on "market research is limited to joint ventures" in the old version of the negative on "market research is limited to joint ventures" in the old version of the negative list is canceled, but at the same time, the old version of "radio and television list is canceled, but at the same time, the old version of "radio and television listening and listening and viewing surveys must still be controlled by the Chinese party". viewing surveys must still be controlled by the Chinese party". Restrictions, that is to say, in the future in the free trade zone, in addition to radio Restrictions, that is to say, in the future in the free trade zone, in addition to radio and television listening and viewing surveys, which must still be controlled by the Chinese side, in other market research industries, foreign investors can be wholly--owned or controlled.

7. In terms of the social survey industry, the new national version of the negative list still retains the item "prohibition of investment in social surveys" in the old version of the negative list, while the new version of the free trade zone version of the negative list has deleted this prohibitive provision, but at the same time stipulates: "The proportion of Chinese shares in social surveys shall not be less than 67 %, and the legal representative shall have Chinese nationality." That is to say, in the free trade zone, foreign capital can enter the field of social surveys, but the proportion of Chinese shares must be greater than or equal to 67% and the legal representative must have Chinese nationality.

Part IV. Fields where foreign investment is prohibited

After this revision, the number of prohibited items in the negative list of the national version (2021 version) is still 21, which has not changed; the number of prohibited items in the negative list of the free trade zone version (2021 version) has been items in the negative list of the free trade zone version (2021 version) has been reduced by one (i.e. Social survey industry), currently seventeen. Prohibited projects reduced by one (i.e. Social survey industry), currently seventeen. Prohibited projects are mainly concentrated in culture, education, some scientific research are mainly concentrated in culture, education, some scientific research and technical services related to national security, mining and legal services, and some industries services related to national security, mining and legal services, and some industries related to food security, such as agriculture, forestry, animal husbandry, fishery, and related to food security, such as agriculture, forestry, animal husbandry, fishery, and tobacco product sales. It can be seen that the areas currently prohibit tobacco product sales. It can be seen that the areas currently prohibited from foreign investment are still some areas related to national security, culture, foreign investment are still some areas related to national security, culture, education, and major people's livelihood education, and major people's livelihood.

Part 5 Conclusion

In a word, the new version of the two negative lists further "reduces the burden and loses weight" on the original basis, continues to expand and deepen opening to the outside world, improves the foreign investment management system, and improves the accuracy of foreign investment management. "Confidence and determination in policy. It is believed that wi th the continuous deepening of my country's reform and opening up process, my country will continue to strengthen the promotion of foreign investment, protect the legitimate rights and interests of foreign investment, optimize the foreign investment enviro nment, increase the depth and breadth of opening up, and provide a broader development space for foreign investment.

Part VI Notes

1. Foreign investment in fields outside the negative list is not without any restrictions, but will receive the same treatment as domestic enterprises.

2. This article does not include an analysis of the foreign investment access policy of Hainan Free Trade Port. According to the "Special Administrative Measures for Foreign Investment Access of Hainan Free Trade Port (Negative List) (2020 Edition)", Hainan Free Trade Port is in the mining industry, telecommunications The degree of opening to the outside world in the fields of industry, legal services, and education is higher than that of other free trade zones.