China's new negative list for foreign investment in free trade zones will make it easier for foreign entry into the increasingly open market and benefit a global economy facing a wave of protectionism, experts said.
The National Development and Reform Commission and the Ministry of Commerce released the shortened negative list for FTZs on June 30, two days after rolling out a list applicable nationwide.
A negative list shows areas where investment is limited or prohibited for foreign investors, with all other areas presumed to be open.
The new list reduces the number of sectors restricted for foreign investors to 45 in all free trade zones, from 95 last year. It is effective after July 30.
Hao Hongmei, vice director of the Foreign Investment Institute at Chinese Academy of International Trade and Economic Cooperation, said the move is part of China's renewed commitment to opening its economy.
The list was released "when domestic industries have become much more competent thanks to the rapid development of FTZs. It is time for them to expand overseas businesses", Hao said. "It will not only enable Chinese companies to collaborate with foreign firms, but also generate opportunities for foreign investors to enter the Chinese market."
Compared with the negative list for nationwide implementation, the one for FTZs outlines the measures to open more key areas, such as agriculture, mining, culture and value-added telecommunications, according to the statement.
Specifically, the foreign investment cap for wheat, new corn variety breeding and seed production in FTZs, will be relaxed from less than 49 percent up to 66 percent ownership by foreigners.
Restrictions on joint ventures or foreign cooperation in exploration and exploitation of petroleum and natural gas will be removed. The ratio of foreigninvested shares in art performance organizations will also be lifted.
China had expedited the agenda to update the lists since the beginning of the year, before the United States threatened to levy tariffs on Chinese imports.
The country has continued on its own path of opening-up and adopted a series of measures in recent months. Hao said these actions are "powerful responses" to rising protectionism initiated by the US, and the benefits will be immediate.
"In a global economy facing de-globalization, China shoulders its responsibility to share development opportunities with the rest of the world," said Ni Yueju, a researcher at Chinese Academy of Social Sciences.
"China is willing to work with global trading partners to make economic globalization more inclusive and balanced."
On Thursday, the new nationwide negative list was unveiled, with the number of items reduced to 48 from 63.
Sang Baichuan, a professor at the University of International Business and Economics, said there is still room for further reduction of the negative list, and the government needs to coordinate the two lists — one for nationwide implementation and the other for FTZs — into one simplified version.
To build a legal system for foreign investment, the enactment of the Law on Foreign Investment will be expedited in the future, according to the white paper China and the World Trade Organization.
For years, China has been committing itself to opening-up and providing other countries with more opportunities to share the benefits of its growth.
Wang Shouwen, vice-minister of commerce, said at a news conference that since joining the WTO, China has brought "enormous opportunities" for worldwide trading partners by opening both its commodity and investment market.
(China Daily June 30, 2018)