'Negative list' heads for wider adoption

The name plate of the China (Shanghai) Pilot Free Trade Zone on a gate of the Waigaoqiao free trade zone in Shanghai. [Zhao Yun / For China Daily]

Foreign investment management process to be streamlined further

China will further reform its foreign investment management system by adopting a "negative list" approach to streamline the process, officials from the top economic planner said on Friday.

The sixth version of the nation's foreign investment catalog is expected to come into effect by the end of the year, following a public comment period on the document.

China will develop a plan to give pre-entry national treatment to foreign investors and explore a 'negative list' management approach", said Wang Dong, deputy director-general of the department of foreign capital and overseas investment at the National Development and Reform Commission.

Wang said that these steps will be among the "significant moves" to facilitate foreign investment since it joined the World Trade Organization in 2001.

The NDRC did not give any timetable for the adoption of the "negative list" management model. China will start substantive negotiations on the negative list with the United States in early 2015 as part of ongoing bilateral investment treaty talks between the world's two largest economies.

A "negative list" is usually appended to a bilateral investment treaty. It specifies areas where foreign capital is banned or limited. Areas not listed are assumed to have no restrictions. The approach was adopted in the China (Shanghai) Pilot Free Trade Zone.

The "negative list" management system will be a fundamental change in the nation's investment management compared with the existing investment approval system, said Zhang Jianping, a senior researcher at the Institute for International Economic Research.

The NDRC has cut the number of sectors with restrictions on foreign investment to 35 from 79 and sectors that require firms to have a Chinese majority shareholder to 32 from 44.

"The revised draft of the foreign investment catalog saw the greatest changes compared with the previous five versions," said Wang. Also on Friday, the NDRC invited the American Chamber of Commerce in China, the European Union Chamber of Commerce in China, the US-China Business Council and the Japan-China Investment Promotion Organization, plus a number of foreign firms, to exchange opinions.

Foreign investors welcomed the latest efforts to remove barriers to foreign investment in China, but they urged the government to further open investment in areas such as the service sector.

John Lenhart, director and chief representative of the US-China Business Council, said foreign investment has become a significant part of China's development.

"Some may be concerned that opening up would hurt the interests of some Chinese enterprises, but the experience of the manufacturing and electronics industries have showed that opening up and competition can also make Chinese enterprises stronger and more efficient," said Lenhart.