China's Catalog of Foreign-Invested Industries and the Negative List

What is meant by the term ‘Negative List’?

The term negative list is used to define industries in which foreign companies cannot invest and specifies restrictions or bans on certain types of foreign investment.

For those industries not included in the negative list, foreign investors no longer need to go through the long approval processes.

What is the ‘The Catalogue of Foreign-Invested Industries’?

The Catalogue of Foreign-Invested Industries specifies the industries in which foreign investment is encouraged, restricted, or prohibited. The catalogue facilitates the management of foreign investment and implementation of any preferential measures in the listed industries. Also, the non-listed industries have no particular investment restrictions.  

The Negative List of Foreign Investment or The Catalogue of Foreign-Invested Industries - Which one should I rely on before investing in China?

China is increasingly adopting substantial policies for foreign investment into the country and opening up the market to make access for foreign investment easier.

First introduced by China almost 20 years ago, the Catalogue is constantly updated with the development of national industrial policies and relevant governmental policies. 

The Negative List for investment, also released  recently, differentiates between the industries in which investments may be made with fewer formalities verses those in which investments may be restricted.

Simply put, the Negative List consists of industries in which making investments is complicated or prohibited.

Yet the Catalogue will still play an important role for a while, because the Negative List originated from the Catalogue, and the encouraged category is still the basis for any tax reduction or exemption policies for such encouraged industries.

To sum up, an investor should first look into and rely on the Negative List. It is then your consultant’s and the government authorities’ responsibility to reference the Catalogue and provide further advice and instruction.