Introduction to the Special Administrative Measures for Foreign Investment Access (Negative List)

• What It Is: This is a special management system for foreign investment access. It clearly stipulates the restrictive measures for foreign investment in aspects such as equity requirements and executive requirements. In areas outside the Negative List, foreign investment will be managed in accordance with the principle of equal treatment for domestic and foreign capital, ensuring a fair and open market.
• When It Takes Effect: The Negative List was announced by the National Development and Reform Commission and the Ministry of Commerce on September 6, 2024, and officially came into effect on November 1, 2024. It provides clear regulatory guidance for foreign investment.
• Main Changes from the 2021 Version: The 2024 version of the Negative List has completely eliminated foreign investment access restrictions in the manufacturing sector. This significant adjustment further relaxes the conditions for foreign investment access, expands the scope of opening up, and demonstrates China’s determination and confidence in promoting high-level opening up to the outside world.
• Significance of This Initiative: This is a key measure for China to build a higher-level open economic system. By optimizing the foreign investment access environment, it shows China’s firm stance on promoting investment liberalization and facilitation. China looks to attract more global capital and resource elements, which promotes the upgrading of domestic industries and high-quality economic development, and enhances China’s position in the global industrial and supply chains.

Here is our further analysis (hereinafter referred to as the “List”):

The update of the List is aimed at addressing the following issues:

Responding to the New Situation of Economic Globalization and International Competitive Pressure

• Adapting to the Adjustment of Global Industrial and Supply Chains: The global industrial and supply chains have been accelerating their adjustment due to factors such as the pandemic and geopolitical issues. China needs to build more resilient and open industrial and supply chains. The Negative List guides foreign investment into key areas to enhance the modernization level of the industrial chain and strengthen its position in global industrial division and cooperation.
• Coping with the China-US Trade War and US Sanctions: The US has imposed tariffs and sanctions on China in the high-tech field, affecting some of China’s industries. The Negative List guides foreign investment into advanced manufacturing and high-tech fields to help with industrial upgrading and technological innovation, reduce dependence on the US, and enhance international competitiveness.

Optimizing Domestic Industrial Structure and Economic Development:

• Promoting Industrial Upgrading: Guiding foreign investment into advanced manufacturing and high-tech fields brings in capital, technology, and management experience, helping with domestic industrial upgrading and the development of new types of productive forces, and accelerating high-quality economic development.
• Increasing the Supply of Products and Services: Attracting foreign investment in various fields enriches the domestic market with high-quality products and services, promotes positive competition.

The Overall Goals of the List:

Promoting High-Quality Economic Development:

• Enhancing Industrial Competitiveness: Guiding foreign investment into advanced manufacturing and high-tech fields helps with domestic industrial upgrading and enhances industrial competitiveness.
• Promoting Innovation-Driven Development: Attracting foreign companies to bring in new technological concepts stimulates domestic innovation vitality, promotes the transformation of scientific and technological achievements, and accelerates the development of new types of productive forces.

Strengthening International Economic Cooperation:

• Enhancing Cooperation with Multinational Companies: Providing a broad development space for multinational companies promotes technological exchanges and industrial cooperation, achieving mutual benefits and win-win results.
• Stabilizing and Enhancing the Position in the Global Industrial Chain: Guiding foreign investment into key industries strengthens integration with the global industrial chain and enhances China’s position in it.

Promoting Domestic Reform and Institutional Innovation:

• Improving Foreign Investment Management System: The negative list management model innovates foreign investment management, increases transparency and standardization, and promotes the transformation of government functions and innovation in management methods.
• Driving Domestic Industrial Reform: The entry of foreign capital prompts domestic industries to improve efficiency and competitiveness, promotes industrial structure adjustment, and optimizes resource allocation.

You can find the list details on the official website:

https://www.gov.cn/gongbao/2024/issue_11606/202409/content_6976935.html