China Free Trade Zone (FTZ) Negative List for Foreign Investment 2021

On December 27th, 2021, China Government issued a new version of the Negative List for Foreign Investment Access in the Free Trade Zone (FTZ negative list 2021). Compare with the FTZ Foreign Investment Negative List in 2020, the number of items of FTZ negative list 2020 has dropped from 30 to 27, with a reduction ratio of 10%.

Currently, the Free Trade Zone Negative List 2021 is only applicable for foreign investments in the 21 FTZs in Mainland China, which are located in Shanghai, Guangdong, Tianjin, Fujian, Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, Shaanxi, Hainan, Shandong, Jiangsu, Guangxi, Hebei, Yunnan, Heilongjiang, Beijing, Anhui, Hunan.

21 Free Trade Zones in China

 

In connection with the China Foreign Investment Law, there are 3 prohibition items that have now been removed from the FTZ Negative List 2020 including articles 5, 6, and 17. In the latest FTD negative list, the Government allows the foreign investors to participate in social investigation investment and Market research field, but the Chinese party needs to hold the controlling share.

Below is the FTZ Negative List for Foreign Investment Access 2021:

Category 1: Agriculture, forestry, animal husbandry, fisheries

1. The proportion of Chinese parts in the selection and seed production of new varieties of wheat should not be less than 34%.

2. Investment in the development, breeding, cultivation, and production of related reproductive materials (including the good genes of the cultivation, animal husbandry, and aquaculture industries) of rare and unique Chinese varieties is prohibited.

3. It is prohibited to invest in the selection and breeding of genetically modified varieties of crops, livestock and poultry, and the production of genetically modified seeds (seedlings).

Category 2: Mining

4. Investment in rare earth, radioactive minerals, tungsten exploration, mining, and mineral processing is prohibited. (It is forbidden to enter the rare earth mining area without permission, or obtain mine geological data, ore samples, and production technology.)

Category 3: Electricity, heat, gas, and water production and supply

5. The construction and operation of nuclear power stations must be controlled by the Chinese party.

Category 4: Wholesale and retail

6. It is prohibited to invest in the wholesale and retail of tobacco leaves, cigarettes, re-baked tobacco leaves, and other tobacco products.

Category 5: Transport, warehousing, and postal services

7. It is required that Chinese companies have a controlling stake in domestic water transport. (and it is not allowed to operate or rent Chinese ships or shipping space or the other methods in disguised form to operate domestic waterway transportation business and auxiliary business; The Water transport operators shall not use foreign ships to operate domestic water transport business; However, with the approval of the Chinese government, if there are no Chinese ships that can meet the transportation requirements in China, and the port or water area where the ship stops is an open port or water area, the water transport operators may temporarily operate within the time limit or range specified by the Chinese government and may use the foreign ships to operate maritime transportation and towing between Chinese ports.)

8. Chinese public air transport enterprises shall be controlled by the Chinese side and if the proportion of investment by a foreign investor and its affiliated enterprises shall not exceed 25%, the legal representative shall be a Chinese citizen. The legal representative of General airlines must be a Chinese citizen, of which agriculture, forestry, and fisheries airlines shall be limited to joint ventures and other general-purpose airlines shall be limited to Chinese holdings. (Only Chinese public air transport enterprises can operate domestic air services and provide regular and irregular international air services as China’s designated carrier.)

9. Chinese companies must have a controlling stake in the construction and operation of civil airports. The foreign party cannot participate in the construction and operation of the airport control tower.

10. It is prohibited to invest in the domestic express services provided by postal companies (and to operate postal services) and letters.

Category 6: Information transmission, software, and information technology services

11. Telecom companies: limited to the telecom services promised to be opened by China’s accession to the WTO, the foreign share ratio of value-added telecom services shall not exceed 50% (except e-commerce, domestic multi-party communication, storage and forwarding, and call center). The basic telecom services must be controlled by the Chinese party (and the operator must be a company established according to law, specializing in basic telecom services). The pilot policy of the original area [28.8 square kilometers] of the Shanghai pilot free trade zone is extended to all pilot free trade zones.

12. It is prohibited to invest in Internet news information services, internet publishing services, network audio-visual program services, Internet cultural operation (except music), and Internet public information services (except for the contents already opened in China’s WTO accession commitments).

Category 7: Leasing and business services

13. It is prohibited to invest in Chinese legal affairs (except for information on the environmental impact of Chinese law), it is prohibited to be partners of domestic law firms. (Foreign law firms can only enter China by means of representative offices, and shall not employ Chinese practicing lawyers, and the auxiliary personnel employed shall not provide legal services to the parties; To set up a representative office or dispatch the representative in China, it must be approved by the Chinese judicial administration department.)

14. Radio and television listening and viewing investigation research shall be controlled by the Chinese party. The Chinese share ratio in social survey shall not be less than 67%, and the legal representative shall have Chinese nationality.

Category 8: Scientific research and technology services

15. Investment in human stem cells, gene diagnosis, and therapeutic technology development and application are prohibited.

16. Investment in humanities and social science research institutions is prohibited.

17. It is prohibited to invest in geodesy, marine mapping, surveying and aerial photography, ground movement surveys, administrative area boundary mapping, topographic maps, maps of world political areas, maps of national political areas, maps of provincial and below political areas, national teaching maps, local teaching maps, true 3D maps and navigational electronic maps, regional geological mapping, mineral geology, geophysics, geochemistry, hydrogeology, environmental geology, geological disasters, remote sensing geology, etc. (Mining owner which working within the scope of mining rights is not restricted by this special management measure.)

Category 9: Education

18. Pre-school, ordinary high schools, and higher education institutions are limited to Sino-foreign cooperative running of schools and shall be controlled by the Chinese side (the principal or principal administrative officer shall have Chinese nationality and live in China). Board members should be Chinese, and the board of directors or joint management committee shall not have a ratio of less than 1/2. (Foreign educational institutions, other organizations, or individuals may not set up schools and other educational institutions (excluding non-school system vocational training institutions and school system vocational education institutions) with Chinese citizens as the main enrollment objects, however, foreign educational institutions may cooperate with Chinese educational institutions to set up educational institutions with Chinese citizens as the main enrollment objects.)

19. Investment in compulsory education institutions and religious educational institutions is prohibited.

Category 10: Health and social work

20. Medical institutions are limited to Joint Ventures.

Category 11: Culture, sports, and entertainment

21. Investment in Media organizations (including but not limited to news agencies) is prohibited. (If foreign Media organizations set up the Permanent Representative Office or dispatch the resident journalists in China, it shall be subject to the approval of the Chinese government. The News service provided by foreign news agencies in China shall be subject to the examination and approval of the Chinese government. Business cooperation between Chinese and foreign News agencies must be led by the Chinese side and approved by the Chinese government.)

22. Investment in the editing, publication and production of books, newspapers, periodicals, audio-visual products, and electronic publications is prohibited. (However, with the approval of the Chinese government, Chinese and foreign publishing units may carry out press and Sino foreign cooperative publishing projects under the conditions of ensuring the leading right of the cooperative party in operation and the right of final adjudication of the content, and complying with other conditions approved by the Chinese government. It is prohibited to provide financial information services in China without the approval of the Chinese government.)

23. It is prohibited to invest in radio stations, television stations, radio and television channels, radio and television transmission coverage networks, and related infrastructure(Launch station, relay station, radio, and television satellite, satellite uplink station, satellite receiving, and transferring station, microwave station, monitoring station, and cable radio and television transmission coverage network, etc.). It is prohibited to engage in radio and television video-on-demand services and to install services at satellite television broadcast ground receiving facilities. (The approval system shall be implemented for the landing of overseas satellite channels.)

24. It is prohibited to invest in the production and operation of radio and television programs (including the introduction of business) companies. (The introduction of overseas film and television dramas and other overseas TV programs by satellite transmission shall be reported by the units designated by the SARFT. A licensing system shall be implemented for Chinese Foreign Cooperative Production of TV dramas (including TV cartoons))

25. It is prohibited to invest in film production companies, distribution companies, cinema chains companies, and film introduction businesses. (However, Chinese and foreign enterprises are allowed to cooperate in film production with approval.)

26. Auction companies, cultural relics stores, and state-owned cultural relics museums prohibit investment in auctions of cultural relics. (It is prohibited to transfer, mortgage, or lease immovable cultural relics and cultural relics prohibited from leaving the country to foreigners. It is Prohibited to the establishment and operation of intangible cultural heritage investigation institutions; Overseas organizations or individuals conducting intangible cultural heritage investigation, archaeological investigation, exploration, and excavation in China shall take the form of cooperation with China and obtain special approval and permission.)

27. The Artistic performance organization should be controlled and held the majority of shares by the Chinese party.

  • Edited by GWBMA  (FTZ Negative list 2021 published on this website is authentic in Chinese Version. The English version is provided for reference only. )

GWBMA provides one-stop business services for Foreign Enterprises, including company registrationlocationAccounting & TaxHR outsourcing, and legal services. The team and partner of GWBMA have graduated from famous schools and abroad with rich experience in practice. We are well versed in foreign investment, intellectual property, and other business, and can tailor the most suitable foreign investment plan for customers according to their actual situation.

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