China opens up more sectors for domestic, foreign investment with a smaller negative list
New move shows Beijing’s resolve to undo restrictions on business
Published: Dec 16, 2020 06:33 PM

A rare-earth mining operation in Baotou, North China's Inner Mongolia Autonomous Region Photo: cnsphoto

China is expected to open up new sectors and industries, including forestry resource, mining rights and carbon emissions trading, to both domestic and foreign businesses, as it started to remove restrictions and approval requirements in what's known as a negative list of areas off-limit for companies.

Under the new negative list of market access, released on Wednesday by the National Development and Reform Commission (NDRC), the country's top economic planner, and the Ministry of Commerce, eight items were removed from the 2019 edition, leaving only 123 restrictions for market access, according to a spokesperson for the NDRC.

Among the sectors that have been opened are forestry resources, mining rights and carbon emissions trading. More than a dozen other sectors were deleted, including requirements for regulatory approval for businesses that handle the inspection and identification of import and export goods, customs brokers and asset appraisal firms' securities service.

"The revision of the list is conducive to further relaxing restrictions on market access, ensuring equal access, promoting better integration of markets and the government, and accelerating the formation of an efficient and uniform domestic market where there is fair competition," Meng Wei, a spokesperson for the NDRC, told a press briefing on Wednesday.

In line with its long-standing opening-up policy, China has adopted a negative list-based investment management scheme, under which regulators list sectors that are off-limit for businesses, as well as requirements for access to certain industries. The country has three negative lists: a national-level list, a list for the country's free trade zones (FTZs) and a list for foreign investors.

"The new negative list is a national one that applies equally to domestic and foreign businesses. That is very significant because it fits into the overall direction of China's opening-up policies to ensure equal treatment and market access," Bai Ming, deputy director of the Ministry of Commerce's International Market Research Institute, told the Global Times on Wednesday.

Bai said that further reduction of the list could be challenging because of national security and other important considerations, but more areas would be gradually opened up.

The reductions to the national-level negative list followed similar measures to the negative list for the FTZs and for foreign companies earlier this year. 

Sectors in the list for FTZs were reduced to 30 on July 23 from 37 in 2019, while the list for foreign companies was reduced to 33 items from 40. Among the sectors opened up for foreign investors were key areas in services, including the financial, transport, manufacturing and agriculture sectors.

"Against the backdrop of the COVID-19 pandemic, during which time many countries turned inward, China has taken concrete steps to further open its domestic market for foreign investors. The scale of the new opening-up measures is unprecedented and something no other country can match," Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations, told the Global Times on Wednesday.

Chen stressed that the opening measures are in line with China's own development needs and strategies, rather than answering certain demands made by foreign countries. 

"We have to make it clear that this is at our own pace and initiative," she said.

Market access has become a point of friction in trade and investment deal negotiations between China and other major global economies, particularly the US and the EU. China and the US signed a phase one trade deal early this year that includes expanding market access in certain areas by China. 

China and the EU are in the final stages of talks for a sweeping bilateral investment treaty, where market access issues remain a sticking point, according to some media reports.

"While the pace of opening-up must be decided by China itself, the latest moves are also relevant to the talks and should help the process," Chen said.