The Ministry of Commerce and the National Development and Reform Commission of the People’s Republic of China have issued a draft of the 7th Revision to Foreign Investment Industry Catalogue (“Draft”) for public comment.
The Delegations of German Industry and Commerce in China generally welcome the new structure of the Draft, distinguishing between encouraged sectors and the new “negative list” (“FIE Negative List”).
However, we get the impression that there is no substantial opening up for foreign investors in the Draft as expected. Most sectors are just rearranged under adjusted terms. It is announced that the restricted industries for foreign investors have been reduced by 31 from 93 to 62 (35 restricted and 27 forbidden items). However, 11 items just have been removed from the FIE Negative List subject to the principle of consistency between domestic and foreign investment, because these items are already stated in a general negative list (“General Negative List”) for both domestic and foreign companies issued by NDRC and MOFCOM in March 2016. Some of the restricted items in the Draft have been combined. As a result the Draft will totally or partly open 16 items which are restricted or encouraged with conditions till now.
The former “foreign investment industrial guidance catalogue” and the new FIE Negative List are only two pieces within the legal and economic system in China, which continues to differentiate between foreign and domestic investment as a general rule. The modification of such two pieces cannot hide the fact that any policy on opening up for foreign investors – if truly meant to be serious - will be successful only, if such general rule is abolished in law and practice.