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Clifford Chance

Clifford Chance

Briefings

China Eases Restrictions on Foreign Investment

25 July 2018

China has relaxed its 'Negative List' which identifies areas that are off limits to foreign investors. From 28 July 2018, existing restrictions on investment in financial institutions, automobiles, industrial/manufacturing and telecoms will be eased or cancelled.
The 2018 Negative List, issued by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM), increases the foreign ownership limit on Chinese securities companies (life insurance companies) from 49 per cent (50 per cent) to 51 per cent and the limits will be removed entirely in 2021. The 50 per cent limit on foreign
ownership for manufacturing commercial vehicles and passenger vehicles will be removed in 2020 and 2022 respectively.
The Chinese government says that the move is intended to attract more foreign investment and to promote competition.
In addition to the 2018 Negative List which applies nationwide, the NDRC and MOFCOM have introduced the 2018 Free Trade Zone Special Administrative Measures for Foreign Investment Access, which takes effect from 30 July 2018. This applies to China's free trade zones in 11 provinces and has fewer investment restrictions to ensure that China's free trade zones remain competitive. In our view the nationwide negative list may gradually match the looser restrictions in place in the free trade zones.

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