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Broader Foreign Investment Allowed In China's Free Trade Zones

by Lorys Charalambous, Lowtax.net, Cyprus
21 June, 2017

China has updated the "negative list" of precluded foreign investments in the country's 11 free trade zones, cutting 27 restrictions on foreign investment across eight sectors including mining, manufacturing, and banking.

The list, first compiled in 2013, when the first free trade zone was set up in Shanghai, spells out specific bans or restrictions to foreign investment. In 2013, there were 190 items on the negative list. This was reduced to 139 in 2014, and to 122 in 2015. The list now stands at 95 items. Authorities have vowed to gradually shorten the list.

In manufacturing, foreign companies are now allowed to produce their own rail transport facilities, instead of having to set up joint ventures with local firms. Rules have also been eased for foreign companies manufacturing electric vehicles and related products, while foreign banks are no longer required to operate for a minimum period before being able to launch yuan services, including underwriting government bonds.

The gradual relaxation of the negative list follows the success of China's first free trade zone in Shanghai, which at the end of April was home to 8,734 foreign-funded companies, with contracted foreign investment reaching CNY688bn (USD101bn).

China now has free trade zones in Shanghai, Tianjin, Guangdong, and Fujian, and announced in March that it had approved further free trades zones in the city of Chongqing and the provinces of Liaoning, Zhejiang, Henan, Hubei, Sichuan, and Shaanxi.

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