The New Edition of the Negative List for Foreign Investment Admission Released! Effective from November 1, 2024

In September 2024, the National Development and Reform Commission and the Ministry of Commerce issued the “Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Edition),” announcing that it will officially take effect on November 1, 2024. This new version of the negative list marks China’s complete opening of foreign investment access in the manufacturing sector, sending a strong signal of China’s continued expansion of its openness to the world.

Background of the Issuance and Its Significance

The 2024 version of the negative list was issued as part of China’s ongoing efforts to expand its openness. Over the past five years, China has continuously revised its national and Free Trade Zone negative lists for foreign investment admission, introducing a series of significant opening measures across various sectors. Notably, the manufacturing sector restrictions in the Free Trade Zone negative list were already “cleared to zero” by 2021.

In October 2023, at the 3rd Belt and Road International Cooperation Summit Forum, President Xi Jinping announced the complete removal of restrictions on foreign investment access in the manufacturing sector. The 20th Central Committee of the Communist Party of China further solidified this direction, calling for the continuous promotion of high-level opening-up, leveraging China’s vast market advantages to enhance international cooperation, and advancing China’s economic development towards a higher level of an open economic system.

The full removal of foreign investment restrictions in the manufacturing sector is a key measure in building a modern industrial system. It will help China participate in global industrial division and cooperation at a deeper level, creating a more open and resilient industrial and supply chain.

It is also a significant step to enhance both the scale and quality of foreign investment, guiding foreign capital toward advanced manufacturing, high-tech sectors, and optimizing the structure of foreign investment. Furthermore, it represents a deepening of reforms in foreign investment management, applying consistent management practices between domestic and foreign enterprises on a larger scale. This will further improve the market-oriented, law-based, and international business environment, injecting positive momentum into supply-side structural reform and driving high-quality development.

Major Adjustments

Reduction in List Items: Compared with the 2021 version, the 2024 version of the national negative list for foreign investment has reduced the number of items from 31 to 29, with all restrictions on foreign investment in the manufacturing sector being “cleared to zero.” Two key restrictions removed in this revision include:

(1) Publications printing must be majority-owned by Chinese partners;
(2) The prohibition of foreign investment in traditional Chinese medicine processing techniques
(steaming, frying, roasting, calcining) and the production of products with confidential formulas of traditional Chinese medicines.

By removing these restrictions, China has fully lifted the foreign investment restrictions in the manufacturing sector, showcasing its determination to further embrace globalization and promote the high-end, intelligent, and green development of industries.

Expanded Opening in the Healthcare Sector: Restrictions on foreign investment in “human stem cells, gene diagnosis and treatment technology development and application” and “medical institutions” have also been partially lifted in some areas as part of a pilot expansion of openness. On September 7, 2024, the Ministry of Commerce, the National Health Commission,
and the National Medical Products Administration issued a notice on expanding openness in the healthcare field. The notice clarified:

(1) In the China (Beijing), China (Shanghai), China (Guangdong) Free Trade Zones, and the Hainan Free Trade Port, foreign-invested enterprises will be allowed to engage in the development and application of human stem cells, gene diagnosis, and treatment technologies for the registration and production of products. Once approved, these products can be used nationwide.

(2) The establishment of wholly foreign-owned hospitals (excluding traditional Chinese medicine and the acquisition of public hospitals) will be allowed in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and Hainan Island. Specific conditions, requirements, and procedures for setting up these hospitals will be announced later.

Further Opening in the Service Sector

According to the new negative list, foreign investment in sectors not included in the negative list will be managed according to the principle of “equal treatment for domestic and foreign capital.” This means foreign companies in these sectors will enjoy the same market access treatment as domestic companies, further boosting the confidence and willingness of foreign enterprises to develop in China.

In addition to the full opening of the manufacturing sector, more industries are expected to gradually open up in the future. The 20th Central Committee of the Communist Party of China has clearly stated that it is an inevitable trend to reasonably reduce the negative list. Sectors such as telecommunications, the internet, education, culture, and healthcare will gradually open
in an orderly manner.

The service industry, which plays a critical role in people’s livelihoods, has been a focal point of this expansion plan. The National Development and Reform Commission and related departments will continue to promote the opening-up of the service sector, particularly in areas like value-added telecommunications and healthcare, where pilot projects have already started.
More industries are expected to conduct openness pilots through platforms such as Free Trade Zones and Free Trade Ports, driving China’s service sector toward high-quality development. This will not only enhance the domestic service industry’s diversified supply capabilities but also provide broader development opportunities for foreign enterprises.

The launch of the new negative list signifies that China’s policy towards foreign investment has entered a new phase. With the full opening of the manufacturing sector and the gradual opening of sectors such as services and healthcare, the development space for foreign enterprises in China will further expand. This revision showcases China’s positive stance in the global industrial division of labor and presents more development opportunities for foreign-invested enterprises.

In the future, the state will continue to deepen its opening-up policies by continuously optimizing the business environment to ensure that foreign companies in China can “enter, stay, and thrive,” achieving mutual benefit and a win-win situation.

Related Topics