China Opens up Finance, Infrastructure, Transportation to Foreign Investors

Chinese regulators lifted barriers on foreign investment in hopes of fueling the coronavirus-hit economy.

Author: Belinda Zhou   

The world's second-largest economy lifted foreign ownership limits in the key sectors of finance, infrastructure, and transportation on Wednesday.

China's macroeconomic management agency and the Ministry of Commerce issued foreign investment lists for 2020 on Wednesday, saying that the restrictions on foreign shares of brokerages, futures companies, and life insurance firms will be lifted, effective on July 23.

Formerly, foreign investors have not been allowed to exceed ownership stakes of 51% in these sectors.

In the reduction of its so-called "negative list," the country aimed to demonstrate its support of economic globalization and transnational investment, a spokesman from the National Development and Reform Commission said on Wednesday.

A negative list is a management model of foreign investment under the foreign investment law, which specifies restricted or prohibited sectors to foreign stakeholders.

Among the remaining restricted sectors are tobacco and telecommunication. For those, foreign investors must meet certain conditions of pre-approval from the government.

As of Wednesday, there were two negative lists specifically applicable to foreign investors, including 2020 national negative list and 2020 the Free Trade Zone negative list. 

Beijing has cut the negative lists from 40 to 33 for the national list, down 18% year-over-year, and reduced the list for the free trade zone from 37 to 30, down 19% year-over-year, according to the statement on Wednesday. The first version of national and the free trade zone negative lists were 93 and 122 in 2017.

"Amid the background of the huge impact of the COVID-19 epidemic on global transnational investment, this move has released a strong signal of opening up to promote reform and development," China's state-owned Xinhua News Agency said on Wednesday.

Beijing also lifted prohibiting regulations on foreign investment on water supply and drainage pipeline networks in the cities with over 500,000 population.

It had also relaxed restrictions of foreign investment on air traffic control, Chinese herbal medicines, vocational education institutions, and commercial vehicle manufacturing.

Individual foreign investors still cannot engage in investment and business activities in China.

China has attracted foreign capital of $136.3 billion, $138.3 billion, and $141.2 billion in 2017, 2018, and 2019, respectively.