The Negative List is all about market access. China first piloted this business-friendly measure in 2013. Since then, the measure has been rolled out nationwide, with each update expanding foreign investors' market access, offering them unprecedented freedom to do business in China.
In terms of the 2020 version, items on the national negative list were cut from 40 to 33, and the negative list for pilot free trade zones (FTZs) shrank from 37 to 30. The shortened nationwide list further improves the level of openness in the service, manufacturing and agricultural sectors.
China is also enlarging the scope of investment by foreigners with a revised catalog of industries in which such investment is encouraged. In the latest 2020 edition, the catalog has a total of 1,235 items for nationwide implementation as well as a secondary catalog applicable specifically to central and western regions.
The latest edition favors foreign investment in advanced manufacturing to enhance resilience in industrial and supply chains and in modern services to boost quality in the sector. Newly added and revised listings of industries include 5G, blockchain, maintenance of high-end equipment, online education and online health services.
Since reform and opening up, China has adopted a holistic strategy of proceeding in an orderly and step-by-step way from the coastal region to inland cities. Currently, the main economic areas are as follows:
1) National Pilot Free Trade Zones:
By September 2020, a total of 21 pilot FTZs had been established in Shanghai, Guangdong, Tianjin, Fujian, Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, Shaanxi, Hainan, Shandong, Jiangsu, Guangxi, Hebei, Yunnan, Heilongjiang, Beijing, Hunan, and Anhui. The China (Shanghai) Pilot Free Trade Zone Lin-gang Special Area has now also been established and the China (Zhejiang) Pilot Free Trade Zone has been expanded.
2) Special Economic Zones:
Shenzhen, Zhuhai, Xiamen, Shantou, Hainan Island, Kashgarand Khorgos;
3) State-level New Areas (as of 2020):
There are currently 19 state level new areas established in total (eight in the east, two in the central region, six in the west, and three in the northeast). They are as follows: Shanghai Pudong New Area, Tianjin Binhai New Area, Chongqing Liangjiang New Area, ZhouShan Islands New Area, Gansu Lanzhou New Area, Guangdong Nansha New Area, Shaanxi Xixian New Area, Guizhou Gui'an New Area, Qingdao West Coast New Area, Liaoning Jinpu New Area, Sichuan Tianfu New Area, Hunan Xiangjiang New Area, Jiangsu Jiangbei New Area, Fujian Fuzhou New Area, Yunnan Dianzhong New Area, Heilongjiang Harbin New Area, Jinlin Changchun New Area, Jiangxi Ganjiang New Area, and Hebei Xiong'an New Area.
4) As of 2021, there are a total of 218 state-level economic and technological development zones, 19 border or cross-border economic cooperation zones and 168 national high-tech industrial development zones located in the provinces, municipalities and autonomous regions.
The western development policies：In accordance with the strategy of developing China's western region, investment including foreign funding in the central and western region of inland China is encouraged.
At present, a tax system is in effect to ensure that "preferential treatment is mainly granted to industries, with regional preferences as a complement."
Enterprises engaged in agriculture, forestry, animal husbandry and fishery projects, public infrastructure projects, environmental protection projects, energy conservation projects and water saving projects enjoy corporate income tax exemption or reduction; high-tech enterprises are taxed at the reduced rate of 15 percent; western China enterprises in industries specifically encouraged by the government are taxed at the reduced rate of 15 percent; and small, low-profit enterprises also receive preferential tax treatment. Enterprises are advised to refer to specific laws and regulations for the preferential tax policies of particular categories. Click HERE for more detailed policies.
Foreign-invested enterprises can also enjoy regional preferential tax policies. In addition to the policies stated above, they can settle in the areas with additional preferential tax policies, such as national pilot free trade zones or economic and technological development zones, as a (new) company or a branch. For more details, please refer to the official website of the development areas.
Professional investment promotion service system and platforms
Since the beginning of reform and opening up, China has gradually developed a systematic service framework to promote foreign investment, and has put in place a model of investment promotion services with government departments providing guidance, investment promotion agencies doing the work, and all sectors of society involved.
China hosts increasingly diverse foreign investment promotion activities. Central and local governments proactively establish exhibition platforms and expand channels for foreign investment promotion. At the national level, the Ministry of Commerce (MOFCOM) promotes investment and trade exhibitions like the China International Import Expo, the China International Fair for Investment & Trade, and the Central China Investment and Trade Exposition. These events unleash the full potential of exhibitions by gathering governmental, institutional, and corporate resources, and provide platforms for foreign investors to better understand the investment environment in different parts of China and engage in negotiation and collaboration.
Private organizations like the China Association of Enterprises with Foreign Investment, the China Council for International Investment Promotion, and the China Council for the Promotion of International Trade also actively participate in foreign investment promotion activities.
Dedicated agencies for investment promotion have been established in most of China's provinces, municipalities, and autonomous regions. Despite differences in name, local investment promotion agencies perform the same functions such as image promotion for localities, activity organization and coordination, and project introduction and tracking. Investment promotion agencies around China continue to optimize their setup with increasingly stable and expanded teams, and greater emphasis has been placed on promoting investment in a distinctive way that takes into account regional advantages.