China shortens negative list for foreign investment

The National Development and Reform Commission, China's top economic planner, and the Ministry of Commerce on Thursday unveiled a new version of negative list which cuts the number of items remaining off-limit to foreign investors to 48 from 63, amid efforts to deliver on the promise of opening up more sectors to foreign investment.

According to the negative list, officially named the "Special Administrative Measures on Access to Foreign Investment" and published on the website of the Commission, foreign investors will have wider access to the sectors of automobile, finance, infrastructure, energy, agriculture and so on.

The negative list, which is set to take effect on July 28, gives a specific timetable for the easing of foreign investment curbs in the industries of finance and automobile as already confirmed previously.

The foreign ownership limits for new energy vehicle manufacturing will be fully lifted. The restrictions on foreign ownership in joint ventures producing commercial cars and passenger cars will be removed by 2020 and 2022 respectively, according to the negative list.

The negative list will allow foreign investors to hold a 51 percent stake in securities companies, fund management companies, futures companies and insurers as promised before, with the limit to be totally removed by 2021.

In addition, the foreign ownership caps for the industries including ship and aircraft manufacturing, power grid, railway, transportation, scarce coal exploitation and plantation of crops such as wheat and corn will be scrapped.

The general principle of the revised negative list is to further the opening up policy with a shortened negative list of industries where foreign investment is limited or prohibited, and widen access to the key sectors for foreign investors, said the NDRC.

The release of the new negative list fulfills the promise made by Chinese President Xi Jinping at the Boao Forum in April, when he said that "China's door of opening up will not be closed and will only open up even wider". At the time, Xi's remark was misinterpreted by foreign media as a compromise to the United States, with which China was at odds on trade issues.

The NDRC said that the issuance of the new negative list is the latest step to follow the central government's well-designed plan for further opening up, which is aimed at granting wider market accesses to foreign investors.

The announcement of the new negative list comes after US President Donald Trump claimed on Wednesday that he will use the review process of the Committee on Foreign Investment in the United States, which is empowered to call a halt to foreign investment in America on the grounds of national security, to prevent sensitive American technologies from being acquired by foreign companies including those from China.

The US Congress is considering passing a legislation giving the CFIUS bigger authority to control foreign investment deals, according to media reports.

When being asked to make comments on Trump's decision at a regular press conference on Thursday, Gao Feng, spokesperson of China's Ministry of Commerce, expressed disagreement to the strengthened US scrutiny over foreign investment because of national security, saying that both China and the United States will benefit from technological cooperation.

"Limiting exports [of technologies] will be counterproductive," said Gao at the press conference.

On the same day, Lu Kang, spokesperson of China's Ministry of Foreign Affairs, echoed Gao, calling on countries to promote liberalization and simplification of trade and investment.

Ignoring the agreements the two countries had reached during the trade talks, in which Beijing had agreed to buy more US-made agricultural products as a concession, Trump still wielded a big stick to China after his historic meeting with North Korean leader Kim Jong-un, announcing to place tariffs on $50 billion worth of Chinese goods.

Trump's capriciousness on trade problems has added uncertainties to the prospects of the China-US economic and trade relations.

Chinese acquisitions and investments in the United States slumped 92 percent to a mere $1.8 billion in the first five months of 2018, showed a report released by consulting and research company Rhodium Group.