China Sharply Narrows 2020 Foreign Investment Negative List

What’s New: Foreign investors will be given more access to China’s services, manufacturing and agricultural sectors according to a new negative list released Tuesday by the country’s economic planner.

Jointly issued by China’s National Development and Reform Commission (NDRC) and the Ministry of Commerce, the new negative list for foreign investment, which specifies areas foreign investors are restricted from entering, is much shorter than the list for last year.

The total of restricted areas was reduced to 33 from 40 in 2019, and two areas were partially opened. The negative list for free-trade zones was reduced to 30 categories from 37, and one area was partially opened. The new negative list will be effective July 23.

The background: In this year’s government work report, China’s cabinet required that the NDRC and the Ministry of Commerce substantially reduce the negative list by the end of June.

The financial sector, as an important part of the services industry, is accelerating its opening-up, having scrapped limits on foreign ownership of futures companies starting Jan. 1 as pledged in its phase one trade deal with the U.S.

In the infrastructure sector, restriction on foreign participation in the construction and operation of water supply and drainage networks in cities with a population of more than 500,000 will be removed. In the field of transportation, the ban on foreign investment in air traffic control is being lifted, while the limits on civil airports will also be adjusted.

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Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com)