China Negative List for Foreign Investment 2021

On December 27th, 2021, China announced the Foreign Investment Negative List 2021 (hereinafter referred to as the “Negative List for Foreign Investment Access”). Compared with Negative list Edition 2020, the items in Edition 2021 are reduced from 33 to 31 items, with a reduction ratio of 6.1%. Besides that, the China National Development Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) also announced the Negative List for Foreign Investment Access in Pilot Free Trade Zones 2021 (hereinafter referred to as “FTZ Negative List 2021”), which reduced from 30 to 27 compared to FTZ negative list in 2020, with a reduction ratio of 10%.

In the latest version, China canceled Item 8 and Item 9. It means that the restriction of foreign share ratio in passenger car manufacturing and the restriction of the same foreign company can establish two or fewer joint ventures in China to produce similar vehicle products are removed. Meanwhile, the Item of satellite TV broadcast ground receiving facilities and key parts production is canceled also.

Below is the English version of Negative List for Foreign Investment Access 2021 in China.

China Negativel ist 2021

Category 1: Agriculture, forestry, animal husbandry, fisheries

1. The proportion of Chinese companies in the selection and seed production of new varieties of wheat should not be less than 34%. Chinese companies must have a controlling stake in the selection and seed production of new varieties of corn.

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).

4. It is forbidden to invest in the fishing of aquatic products in the sea areas under China’s jurisdiction and inland waters.

Category 2: Mining

5. Investment in rare earth, radioactive minerals, tungsten exploration, mining, and mineral processing is prohibited.

Category 3: Manufacturing

6. Chinese companies must have a controlling stake in the publishing & printing industry.

7. It is prohibited to invest in the application of traditional Chinese medicinal decoction pieces, such as steaming, frying, roasting, and calcining, etc. It is prohibited to invest in the production of traditional Chinese medicine confidential prescription products.

Category 4: Electricity, heat, gas, and water production and supply

8. Chinese companies must have a controlling stake in the construction and operation of nuclear power plants.

Category 5: Wholesale and retail

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

Category 6: Transport, warehousing, and postal services

10. It is required that Chinese companies have a controlling stake in domestic water transport.

11. 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.

12. 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.

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

Category 7: Information transmission, software, and information technology services

14. Pursuant to China’s commitment to open the telecommunication sector to foreign investment, companies may have a value-added telecommunications business with no more than 50% of the shares belonging to foreign companies (except e-commerce, domestic multi-party communications, storage, and forwarding categories, call centers). The basic telecommunications business must be controlled by the Chinese partner.

15. 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 8: Leasing and business services

16. 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.

17. Market research is limited to joint ventures companies, and involving radio and television listening and viewing surveys is limited to joint ventures in which the Chinese company owns a controlling stake.

18. Investment in social surveys is prohibited.

Category 9:  Scientific research and technology services

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

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

21. 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 10: Education

22. 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.

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

Category 11: Health and social work

24. Medical institutions are limited to joint ventures and cooperation.

Category 12: Culture, sports, and entertainment

25. Investment in news organizations (including but not limited to news agencies) is prohibited.

26. Investment in the editing, publication and production of books, newspapers, periodicals, audio-visual products, and electronic publications is prohibited.

27. 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.

28. It is prohibited to invest in the production and operation of radio and television programs (including the introduction of business) companies.

29. It is prohibited to invest in film production companies, distribution companies,  cinema chains companies, and film introduction businesses.

30. Auction companies, cultural relics stores, and state-owned cultural relics museums prohibit investment in auctions of cultural relics.

31. Investment in performing arts groups is prohibited.

(China Negative list 2021 published on this website is authentic in the Chinese version. The English version is provided for reference only. )

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