China’s new ‘negative list’ to be released soon, with emphasis on manufacturing sector
Gao Feng, the spokesperson for the Ministry of Commerce  Photo:
China’s newly revised ‘negative list’ is slated to be released soon, with a focus on opening the country’s manufacturing sector completely in bid to develop high-tech manufacturing industries, according to Chinese media.

The China Securities Journal, a state-run newspaper sponsored by the Xinhua News Agency reported, that the new ‘negative lists’ for foreign investors will include two lists, with one applying to the free trade zones and the other applicable to the rest of the country. Meanwhile, the new version will also specify sectors to be opened up in the next few years.

China started to test the so-called negative list approach in the Shanghai Free Trade Zone (FTZ) in 2013. All sectors not included in the list are open to foreign investors.

The 2017 version of negative list has imposed investment restrictions in 63 industries, registering a cut of 30 off-limit sectors to foreign investors from the 2015 list. The report said the catalogue has been revised twice during the past five years, with restrictive measures slashed by 65 percent.

“There are two things noteworthy for the new list: one is that limitations have been further slashed, with some key sectors being especially prioritized; the second is opening-up blueprints and timetables for the future several years have been made for certain areas.

The new development makes China’s opening up policies more predictable while allowing relevant domestic companies a transition period,” said Yang Pengcheng, the spokesperson for the National Development and Reform Commission (NDRC), China’s top economic planner, at a recent briefing.

It’s emphasized that the new catalogue would especially aim to open up the country’s manufacturing sector in an “across-the-board” way. According to the China Securities Journal, the 2017 negative list had already “basically” opened up the sector which leaves the goal for the next stage quite obvious—completely lifting foreign investment restrictions in the sector.

Based on the latest data from China’s Ministry of Commerce (MOFCOM), the country’s high-tech manufacturing sector has maintained its growth momentum this year. According to MOFCOM, the actual use of foreign investment in the manufacturing sector amounted to 100.42 billion yuan this May, increasing 12.3 percent annually. In the high-tech sub-sector, China used 33.69 billion yuan worth of foreign capital in May, registering a year-on-year surge of 61.9 percent.

Bai Ming, a senior analyst with the Chinese Academy of International Trade and Economic Corporation—a research institution affiliated to the MOFCOM—predicted that with more opening up measures underway, China’s actual intake of foreign capital, especially in high-tech industries will continue to climb.

China’s action to lift foreign investment restrictions came as Donald Trump is imposing tariffs on Chinese exports to the US -especially those subsidized by the Made in China 2025 industrial policy. The US move is widely believed to be aimed at thwarting the country’s efforts to become an advanced industrial power.

Also, the Trump administration and the US business community has been increasing pressure on China to remove investment restrictions on targeted areas. When Steven Mnuchin, the US Treasury secretary engaged in the first round of bilateral trade talks with China in Beijing in early May, he asked for China to issue “an improved nationwide negative list” by July 1, among an extremely long list of demands presented to the Chinese side.

Sang Baichuan, the head of the Institute of International Economy, University of International Business and Economics, suggested it’s better to make a “standard and simplified” list that could be applied to the whole country through integrating the current two lists.

Chinese officials have repeatedly stressed that reform and opening up policies were adopted because it was in China’s own interest, not because the country is capitulating to US demands.


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