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China cuts further negative investment list

The Dutch company representatives calibrate robots at China Yiwu International Intelligent Manufacturing Equipment Expo in Yiwu, East China's Zhejiang province in November 2018. Photo: VCG

China revealed a new, abbreviated nationwide negative list for foreign investment on Sunday, cut Foreign investment from beyond 48 to 40, recently to respect its commitment to further opening up its economy.

Seven major sectors, including freight agencies, gas and heat pipelines in cities with more than 500,000 people, cinemas, value-added telecommunications and oil and gas exploration and development, so that ownership restrictions are relaxed or removed.

Jointly published by the National Development and Reform Commission (NDRC) and the Ministry of Commerce, the new negative list will enter into force on 30 July.

The recently released negative list and foreign investment catalog shows the country's determination to further open up its large market at its own pace and offer benefits from its economic growth to the world, Chinese analysts noted.

A separate list of foreign investment in China's free trade zones enjoying a higher degree of openness slashed limited areas from 45 to 37.

NDRC also promised to scrape any remaining restrictions outside the negative list by the end of the year.

The negative list will provide a greater degree of market access and allow foreign investors to run majority shares or 1

00% owned companies in multiple sectors.

Opening wider

The new negative list was announced one day after the trade war between China and the United States showed signs of easing as the United States agreed to suspend a plan to impose a surcharge of 300 billion kroner Chinese goods after the meeting of Chinese President Xi Jinping and US President Donald Trump on the sidelines of the G20 Osaka Summit.

The rollout of the new negative list is on e of China's self-motivated reform measures.

"Shortening the negative list is by no means a compulsory movement, but rather China's new efforts to further pursue the opening in a wider area and to a greater extent," said Bai Ming, Deputy Director of the Ministry of Commerce (MOFCOM's International Market Research Institute. 19659002] China is the world's hottest investment target thanks to its complete industrial system and promising consumer market, a MOFCOM spokesman said on June 13.

For the first five months, China's actual use of foreign direct investment in dollar denominated terms rose 3.7 percent year-on-year to USD 54.61 billion, data from MOFCOM showed. In particular, US investment in China increased by 7.5 percent.

"It will give China courage and leverage to confront trade tensions with the United States, "said Bai, noting that the new negative list will loosen the capsules in more specific sectors such as cinema. R is to ensure good operation of foreign capital on the domestic market, he said.

China has routinely cut the negative list of foreign investment in recent years. In 2018, the country's catalog of investments was placed for the first time in a negative list, borrowed from similar methods used in China's pilot free trade zones.

A new catalog that controls foreign investment, which is also released on Sunday, encourages foreign investment in advanced, smart and green production.

More than 80 percent of newly opened or changed investment fields are in production, including 5G core components, semiconductors, chip making and cloud computing.

China's support for foreign investment in some sensitive sectors such as 5G core components and semiconductors shows its efforts to "strike a balance between the domestic economic structure and global market concerns that China can seek independent technology development," Song says. Guoyou, Director of the Fudan University Economic Diplomacy Center.

The opening of China's energy industry as oil and gas exploration is related to national security, but the country is able to prevent and control risks, Song said.

Foreign companies will be treated equally with Chinese companies as they enter industries outside the Negative Lists, experts said that they should also comply with applicable local laws and regulations.

China also calls for more foreign investment in the productive service sector.

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