China Releases New Negative Lists for Foreign Investment

China Releases New Negative Lists for Foreign Investment

The National Development and Reform Commission（NDRC） and the Ministry of Commerce recently promulgated the 2020 Negative Lists for Foreign Investment， which came into force on July 23， 2020.

The new， shortened negative lists for foreign investment include the following major changes. In the area of the infrastructure industry， foreign investors are allowed to take majority shares in joint ventures that engage in the building and operation of water supply and drainage networks in cities with a population of more than 500，000. In agriculture， the limit to ownership by foreign investors in wheat breeding and seed production has been raised to 66 percent. In public health， foreign investors are allowed to invest in sectors including prepared slices of traditional Chinese medicine. In education， wholly foreign-owned institutions for vocational education are allowed. China also unveiled its 2020 negative list for foreign investment in pilot free trade zones， which will conduct trials first.

In accordance with the requirements of the foreign investment law and its implementation regulations， China will implement the new lists to the fullest extent to give equal treatment to domestic and foreign enterprises as part of efforts to further open up its economy.

Supporting Goods for Export Sold at Home

The General Office of the State Council has recently introduced 10 measures to support the sales of products for export on the domestic market， which include accelerating market access for those products and providing adequate financing services.

Under the severe challenge of insufficient and unstable external demand， these measures will not only help enterprises tide over the current difficulties， but will also better promote domestic reforms， thus providing strong support for the sustained and healthy development of foreign trade enterprises.

China will guide foreign trade enterprises to meet the demand for consumption upgrading on the domestic market and give full play to their advantages in product quality and R&D， thus helping them develop marketable products for domestic consumption. Through customized production with the help of big data and the Internet， they will build their own brands， which will hopefully promote the recovery of consumption.

At the same time， China will provide strong financing services and support to these enterprises. All kinds of financial institutions will be encouraged to provide financial support for the transition， and large e-commerce platforms will also do their bit to facilitate direct credit services to micro， small， and medium-sized， foreign trade enterprises.

Boosting Domestic Service Industry

At present， the housekeeping industry is speeding up its recovery in China. Ninety percent of big and medium-sized domestic service companies nationwide had resumed work by the end of June.

Xian Guoyi， director general of the Department of Trade in Services and Commercial Services of the Ministry of Commerce， pointed out that promoting the recovery of the domestic service industry is of great significance to ensuring employment.

At present， China has introduced a raft of policies， including value-added tax reduction， social insurance premium reduction， rent reduction， and preferential interest rates for loans， which are applicable to the housekeeping industry.

Furthermore， the legitimate rights and interests of domestic service consumers， providers， and enterprises will be better protected， such as consumers right to know， the privacy of housekeepers and the right to choose whats suitable for both the enterprises and the housekeepers. Besides this， more efforts will also be made to promote the sound development of the whole housekeeping industry.

Internet Banks Welcome New Policy Dividends

A series of support measures have been introduced to ease the funding bottleneck of Internet banks and promote more interindustry cooperation between mainstream financial institutions and the digital ones.

The development of Internet banks will optimize the system of financial institutions in China， which will better serve private small and micro enterprises.

Guo Shuqing， chairman of the China Banking and Insurance Regulatory Commission（CBIRC）， said at the Lujiazui Forum recently that the role of policy-based finance in countercyclical regulation shall be strengthened.

Recently， a series of support measures have been implemented. Policy banks and commercial banks are encouraged to strengthen business cooperation with private Internet banks， and the CBIRC also issued a regulation for the cooperation between them in loans.

Experts also point out that in the future， to support the development of private banks such as Internet-based ones， more differentiated regulatory policies should be made. It is proposed to further broaden their sources of debt and facilitate their access to sources of funding. Product and service innovations are also encouraged while guiding them to properly manage liquidity risks.