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vice industries-wise, foreign companies are What are the favorable policies to
encouraged in production-oriented services, such facilitate FDI in encouraged industries?
as 5G telecommunication technology, blockchain
technology, and design of sewage treatment So far, the following favorable treatment is in place
facilities, with a focus on boosting the quality for foreign-invested enterprises (FIEs) engaged in
of modern services as well as the integrated doing business in the listed industries published in
development of manufacturing and service sectors. the encouraged catalogue:
To narrow the gap between China’s wealthiest
eastern coastal regions and less-developed regions, • Tariff exemptions on imported
the regional catalogue enumerates industries equipment – for encouraged foreign-invested
across the country’s provinces, municipalities, and projects, the import of self-use equipment within
autonomous regions in – the central, west, and the total amount of investment can be exempted
northeastern regions – which require for foreign from customs duties;
knowhow and investment.
• Access to preferential land prices
In the latest 2020 version, Heilongjiang and and looser regulation of land uses – land
Yunnan have added encouraged items related can be preferentially supplied for encouraged
to agricultural product procession and tourism foreign-funded projects with intensive land use.
development; Henan, Shaanxi, and Guangxi The land transfer reserve price can be determined
added medical equipment, epidemic prevention at 70 percent of the national minimum price for
and protection articles, and active pharmaceutical the transfer of industrial land, which yet shall be
ingredient (API) production; Hubei, Sichuan, and no less than that of the local land; and
Chongqing added semiconductor materials and
industrial ceramics; and Anhui and Shanxi are • Lowered corporate income tax
welcoming foreign investment in vocational schools. (CIT) – for FIEs in encouraged industries in
the central, western, and northeastern regions
The catalogue for Hainan, where the whole island that meet the requirements, the CIT rate can be
is being developed into a free trade port, now reduced to 15 percent.
includes as many as 50 items – with 10 added items
related to trade, shipping, finance, and tourism, Why China remains intent on improving
such as yacht design and manufacturing, financial foreign investor access
leasing services, and R&D, design, and parts
manufacturing of new energy vehicles (NEVs). In the Two Sessions meetings in May 2020, after
experiencing the worst of the COVID-19 outbreak
in China, the Chinese government pledged in its
Work Report that China will significantly shorten
negative lists for foreign investment, draw up a
negative list for cross-border trade in services,
grant greater autonomy in reform and opening-
up in special economic zones, open new pilot
free trade zones and integrated bonded areas in
the central and western regions, and foster an
enabling market environment in which Chinese
and foreign companies can be treated as equals.
In June, the NDRC and MOFCOM jointly released
the revised 2020 version of the Negative Lists for
Foreign Investment (“FI negative lists”), which
further removed some sectors restrictive or
prohibited to foreign investment.
In July, the two authorities issued a draft version
of the catalogue of industries encouraging foreign
investment and sought public opinions from
FIEs, foreign business associations, and other
parties. Compared with the draft version, the
official version of the catalogue has added nine
more items.
SOUTH CHINA BUSINESS JOURNAL 4
encouraged in production-oriented services, such facilitate FDI in encouraged industries?
as 5G telecommunication technology, blockchain
technology, and design of sewage treatment So far, the following favorable treatment is in place
facilities, with a focus on boosting the quality for foreign-invested enterprises (FIEs) engaged in
of modern services as well as the integrated doing business in the listed industries published in
development of manufacturing and service sectors. the encouraged catalogue:
To narrow the gap between China’s wealthiest
eastern coastal regions and less-developed regions, • Tariff exemptions on imported
the regional catalogue enumerates industries equipment – for encouraged foreign-invested
across the country’s provinces, municipalities, and projects, the import of self-use equipment within
autonomous regions in – the central, west, and the total amount of investment can be exempted
northeastern regions – which require for foreign from customs duties;
knowhow and investment.
• Access to preferential land prices
In the latest 2020 version, Heilongjiang and and looser regulation of land uses – land
Yunnan have added encouraged items related can be preferentially supplied for encouraged
to agricultural product procession and tourism foreign-funded projects with intensive land use.
development; Henan, Shaanxi, and Guangxi The land transfer reserve price can be determined
added medical equipment, epidemic prevention at 70 percent of the national minimum price for
and protection articles, and active pharmaceutical the transfer of industrial land, which yet shall be
ingredient (API) production; Hubei, Sichuan, and no less than that of the local land; and
Chongqing added semiconductor materials and
industrial ceramics; and Anhui and Shanxi are • Lowered corporate income tax
welcoming foreign investment in vocational schools. (CIT) – for FIEs in encouraged industries in
the central, western, and northeastern regions
The catalogue for Hainan, where the whole island that meet the requirements, the CIT rate can be
is being developed into a free trade port, now reduced to 15 percent.
includes as many as 50 items – with 10 added items
related to trade, shipping, finance, and tourism, Why China remains intent on improving
such as yacht design and manufacturing, financial foreign investor access
leasing services, and R&D, design, and parts
manufacturing of new energy vehicles (NEVs). In the Two Sessions meetings in May 2020, after
experiencing the worst of the COVID-19 outbreak
in China, the Chinese government pledged in its
Work Report that China will significantly shorten
negative lists for foreign investment, draw up a
negative list for cross-border trade in services,
grant greater autonomy in reform and opening-
up in special economic zones, open new pilot
free trade zones and integrated bonded areas in
the central and western regions, and foster an
enabling market environment in which Chinese
and foreign companies can be treated as equals.
In June, the NDRC and MOFCOM jointly released
the revised 2020 version of the Negative Lists for
Foreign Investment (“FI negative lists”), which
further removed some sectors restrictive or
prohibited to foreign investment.
In July, the two authorities issued a draft version
of the catalogue of industries encouraging foreign
investment and sought public opinions from
FIEs, foreign business associations, and other
parties. Compared with the draft version, the
official version of the catalogue has added nine
more items.
SOUTH CHINA BUSINESS JOURNAL 4
