China's National Development and Reform Commission and the Ministry of Commerce issued the foreign negative investment lists for 2020 on the 24th of June. Negative lists are a management model of foreign investment under the foreign investment law, which specifies restricted or prohibited sectors to foreign stakeholders.
There are two negative lists specifically applicable to foreign investors, the 2020 National Negative List and 2020 the Free Trade Zone negative list.
Beijing has cut the prohibited industries on the negative lists from 40 to 33 for the national list and reduced the list for the free trade zone from 37 to 30. The initial version of national and the free trade zone negative lists published in 2017 amounted to 122 prohibited industries on the national list and 93 on the Free Trade list.
The new 2020 negative lists announced the restrictions on foreign shares of brokerages, futures companies, and life insurance firms are to be lifted, effective from the 23rd of July 2020. Formerly in these sectors, foreign investors have not been allowed to exceed ownership stakes of 51% and were limited to joint venture structures.
Restrictions on foreign investment on air traffic control, Chinese herbal medicines, vocational education institutions, and commercial vehicle manufacturing were further relaxed on the FTZ list.
Beijing also lifted prohibiting regulations on foreign investment on water supply and drainage pipeline networks in the cities with over 500,000 population.
Among the remaining restricted sectors are tobacco and telecommunication. For those, foreign investors must meet certain conditions of pre-approval from the government.
2020 National Negative List
2020 FTZ Negative List