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Regulation Around the World: Open Finance
In this issue of Regulation Around the World we look at how regulators are developing their proposals for Open Finance.
China | Publication | December 2024
On 8 September 2024, the Ministry of Commerce (MOFCOM) and the National Development and Reform Commission (NDRC) jointly issued the Special Administrative Measures for the Market Entry of Foreign Investment (Negative List) (2024 Edition) (外商投资准入特别管理措施 (负面清单) (2024年版)) (the 2024 Negative List), which supersedes the previous edition released in 2021.
As briefed in our previous article1, with effect from 1 November 2024, the remaining two restrictions on foreign investment in the manufacturing sector have been lifted pursuant to the 2024 Negative List. This means that China’s manufacturing sector is now fully open to foreign investment, which would enjoy a national treatment as for the domestic investors investing in this sector.2
Specifically:
Apart from the 2024 Negative List which applies nationwide in China, China also adopts a less restrictive foreign investment negative list (the FTZ Negative List) applicable in its several free trade zones4. Such FTZ Negative List has not been updated along with the 2024 Negative List but all foreign investment access restrictions in the manufacturing sector in China’s free trade zones were previously lifted in the 2021 version of the FTZ Negative List.
China has been gradually reducing restrictions/prohibitions on foreign investment since its participation in the WTO in 2001. In October 2016, China reformed its foreign investment regulatory regime by replacing the “approval” regime with a “filing” regime and started to apply the principle of “national treatment” to foreign investors, except where the foreign investments fall within the Negative List (the Foreign Investment Reform).
Here is a summary of the opening-up and liberalisation measures for foreign investment in China’s manufacturing sector since the Foreign Investment Reform in 20165:
Notably, the 2018 Negative List introduced the following liberalisation measures:
As a result of such liberalisation, areas in the manufacturing sector which were restricted or closed to foreign investment were reduced to two. These restrictions on the final remaining two sectors have been ultimately removed under the 2024 Negative List.
China’s continuous efforts to open its market to foreign investors bring potential new investment opportunities to foreign investors. Along with such liberalisation in the manufacturing sector, foreign investors operating as a Sino-foreign joint venture in China may consider increasing their shareholding ratio or buying out the Chinese joint venture partners if they intend to gain a fuller control of their business in China.
Publication
In this issue of Regulation Around the World we look at how regulators are developing their proposals for Open Finance.
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