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 version) and the Special Administrative Measures for foreign investment access in the pilot free trade zone (negative list) (2021 version). In order to understand the revision of the negative list of foreign investment access in 2021, the reporter interviewed the relevant person in charge of the national development and Reform Commission.

Q: please introduce the background of the negative list of foreign investment access in 2021.

answer: the Party Central Committee and the State Council attach great importance to expanding opening to the outside world. In recent years, China has further promoted high-level opening to the outside world and continuously relaxed the access of foreign capital. From 2017 to 2020, the negative lists of the country and pilot free trade zones were revised for four consecutive years. The number of special management measures for foreign investment access was reduced from 93 and 122 to 33 and 30 respectively. A number of major opening-up measures were launched in the fields of Finance and automobile, providing a broader development space for foreign investment. In January 2020, the foreign investment law and its implementation regulations came into force, fully implemented the pre admission national treatment plus negative list management system for foreign investment, strengthened the promotion of foreign investment, protected the legitimate rights and interests of foreign investment and optimized the foreign investment environment. In 2020, against the background of a sharp decline in global transnational investment, China attracted us $149.34 billion in foreign investment, increasing steadily and maintaining the second place in the world.

At present, opening to the outside world is facing a new situation. From China’s perspective, China has turned to a high-quality development stage, with overall stable economic operation and continuous optimization of economic structure, but it also faces many new situations and challenges. Internationally, changes in the world over the past century and the epidemic situation in the 21st century are intertwined, unilateralism and protectionism are on the rise, and economic globalization is facing a countercurrent. Facing the new situation, we will base ourselves on the new development stage, implement the new development concept, build a new development pattern, promote the implementation of wider scope, wider fields and deeper opening-up, and promote high-quality development with high-level opening-up. At the opening ceremony of the Boao Forum for Asia 2021 annual meeting, the general secretary stressed the need to fully implement the foreign investment law and relevant supporting regulations and continue to reduce the negative list of foreign investment access. Premier Li Keqiang pointed out in this year’s government work report that we should actively and effectively use foreign capital and further reduce the negative list of foreign capital access. In order to implement the decisions and arrangements of the CPC Central Committee and the State Council, the national development and Reform Commission, together with the Ministry of Commerce and other departments, revised and issued the 2021 negative list of foreign investment access and continued to expand opening to the outside world.

Q: please introduce the main considerations for revising and Issuing the negative list of foreign investment access in 2021.

answer: the general direction of revising and Issuing the negative list of foreign investment access in 2021 is to further improve the level of opening to the outside world, improve the management system of national treatment plus negative list before foreign investment access, and promote investment liberalization and facilitation. Main principles to be followed: first, coordinate development and security, further expand opening to the outside world, and the intensity of opening to the outside world should be commensurate with national security and regulatory capacity. second, drawing on the international rules, the areas that can prevent and control risks through foreign capital safety review and consistent management measures of domestic and foreign capital are not included in the negative list in principle. third, give full play to the role of the pilot Free Trade Zone in reform and opening up, and continue to expand opening-up first. fourth, safeguard national security and continue to retain restrictions on foreign investment access in sensitive areas such as national political security and ideological security.

Q: compared with the 2020 version, what are the main changes in the negative list of foreign investment access in the 2021 version?

answer: the 2021 negative list of foreign investment access has further shortened the length, improved the management system and improved the accuracy. The negative lists of the country and the pilot free trade zone were further reduced to 31 and 27, with the reduction rates of 6.1% and 10% respectively. The main changes are:

(I) further deepen the opening of manufacturing industry. in the field of automobile manufacturing, the restriction on the proportion of foreign shares in passenger car manufacturing and the restriction that the same foreign investor can establish two or less joint ventures producing similar vehicle products in China. In the field of radio and television equipment manufacturing, the restrictions on foreign investment in the production of satellite television broadcasting ground receiving facilities and key parts shall be abolished and managed in accordance with the principle of consistency between domestic and foreign investment. This revision has cleared the manufacturing items in the negative list of the pilot free trade zone.

(II) the pilot Free Trade Zone explores relaxing the access of service industry. in the field of market research, except that the radio and television listening and viewing investigation must be controlled by the Chinese party, the restrictions on foreign investment access shall be abolished. In the field of social investigation, foreign investment in social investigation is allowed, but the Chinese share ratio is required to be no less than 67%, and the legal representative shall have Chinese nationality.

(III) improve the accuracy of the negative list of foreign investment access. in the description of the negative list, add “if a domestic enterprise engaged in the business in the investment field prohibited by the negative list of foreign capital access issues shares abroad and is listed for trading, it shall be examined and approved by the relevant competent authorities of the state, and the foreign investor shall not participate in the operation and management of the enterprise, and its shareholding proportion shall be implemented with reference to the relevant provisions on the administration of domestic securities investment of foreign investors”, The CSRC and relevant competent departments shall implement precise management on overseas listing and financing of domestic enterprises engaged in businesses prohibited by the negative list in accordance with regulations.

(IV) optimize the management of the negative list of foreign investment access. according to the regulations for the implementation of the foreign investment law, add “foreign invested enterprises investing in China shall comply with the relevant provisions of the negative list of foreign investment access” to the description of the negative list. In order to link up the negative list of foreign capital access with the negative list of market access, add “relevant provisions of the negative list of market access shall be uniformly applicable to domestic and foreign investors” in the description of the negative list.

Q: how do you understand the provisions on improving the accuracy of the negative list of foreign investment access in 2021?

answer: the description of the negative list of foreign investment access in 2021 has been added If a domestic enterprise engaged in the business in the field of investment prohibited by the negative list of foreign capital access issues shares abroad and is listed for trading, it shall be examined and approved by the relevant competent authorities of the state. Foreign investors shall not participate in the operation and management of the enterprise, and their shareholding proportion shall be implemented with reference to the relevant provisions on the administration of domestic securities investment by foreign investors. This provides policy space for domestic enterprises engaged in businesses prohibited from investment in the negative list to list abroad, and is a specific measure to improve the accuracy and inclusiveness of the management of the negative list of foreign capital access. At the same time, it is clear that the overseas listing of such enterprises needs to meet the two conditions that foreign capital does not participate in the operation and management of enterprises and the share ratio meets the provisions, reflecting the requirements of overall development and safety. Distinguish between stock and increment. For individual stock overseas listed enterprises that have exceeded the shareholding ratio of foreign capital, it is not required to reduce the amount of overseas issued shares or A-Shares held by foreign capital.

In the above terms, “subject to the examination and approval of the relevant competent authorities of the state” means that the examination and approval of the listing of domestic enterprises abroad does not apply to the prohibitive provisions of the negative list, rather than the examination and approval of the listing activities of domestic enterprises abroad. The State supports enterprises to choose international and Chinese markets for financing according to law and compliance, so as to achieve healthy and sustainable development. “Relevant provisions on the administration of domestic securities investment by foreign investors” refers to the relevant provisions on foreign investors investing in the domestic securities market through qualified foreign institutional investors (QFII), RMB qualified foreign institutional investors (rqfii), stock market interconnection mechanism and other relevant provisions. The current regulations require that the investment proportion of a single foreign investor and its affiliates shall not exceed 10% of the total shares of the company, and the total investment proportion of all foreign investors and their affiliates shall not exceed 30% of the total shares of the company. For domestic and foreign listed enterprises engaged in businesses prohibited by the negative list, the domestic and foreign listed shares of the same enterprise held by foreign investors shall be calculated together.

Q: according to the new provisions on the negative list of foreign capital access in 2021, how can domestic enterprises engaged in businesses prohibited by the negative list of foreign capital access apply for overseas issuance and listing?

answer: the supervision of overseas issuance and listing of domestic enterprises is led by the CSRC. After a domestic enterprise submits the application materials for overseas listing to the CSRC, if it involves matters such as the prohibited areas of the negative list of foreign capital access, the CSRC will solicit the opinions of the competent authorities of the industry or relevant fields and promote the relevant regulatory procedures in accordance with the regulations. For specific information, enterprises can learn more from the CSRC.

Q: please introduce how to ensure the implementation of the negative list of foreign investment access in 2021?

answer: the 2021 negative list of foreign investment access will come into effect on January 1, 2022. If the current regulations need to be adjusted, the relevant departments shall complete the relevant adjustment within 2 years according to the procedures. The national development and Reform Commission, together with the Ministry of Commerce and other departments and localities, will earnestly implement the negative list of foreign investment access in strict accordance with the requirements of the foreign investment law and the implementation regulations, so as to ensure the timely implementation of new opening-up measures. Areas outside the negative list shall be managed in accordance with the principle of internal and external consistency, and foreign-invested enterprises shall be given national treatment. At the same time, we will do a good job in risk prevention and control in new open areas and safeguard national security.

analysis and interpretation

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(NDRC website)