(“2015 CATALOGUE”) (外商投资产业指导目录( 2015 年修订)), ISSUED BY THE NATIONAL DEVELOPMENT AND REFORM COMMISSION (“NDRC”) AND THE MINISTRY OF COMMERCE (“MOFCOM”)

After requesting public comments on a draft published on November 4, 2014 — as explained in our Legal Flash of November 2014— NDRC and MOFCOM have officially enacted the 2015 Foreign Investment Industrial Guidance Catalogue1, a key legal document on foreign direct investment in the People’s Republic of China (“PRC”) regulating (i) access to Chinese industries, (ii) maximum shareholding ratios allowed and (iii) how investment can be implemented.

The 2015 Catalogue incorporates reforms implemented in the China (Shanghai) Pilot Free Trade Zone, but has not adopted the “Negative List” regime. However, the draft Foreign Investment Law published in January 2015 introducing this regime proves the Chinese lawmakers’ intention to instate it nationwide in the near future.

In contrast, industries are still divided into three categories: “encouraged sectors,” “restricted sectors” and “prohibited sectors.” Foreign investors can access and invest in any industries not listed under these categories and, thus, permitted.

In comparison with its previous edition (the 2011 Catalogue, effective January 1, 2012, to April 10, 2015), the main changes are as follows:

  • Prohibited sectors hardly change, as only a few industries have been removed and others have been added. 

Entertainment industries, including operating theaters and golf courses, and R&D programs in transgenic crops, are no longer prohibited sectors, unlike the tobacco industry, which has been newly added.

  • Restricted sectors have been narrowed and the limitation on foreign ownership ratios in many industries is more relaxed. 

Real estate activities such as land development and hotel operation, the production of specific  active substances and blood products,  and the inspection and certification of imports and exports have been removed from the restricted sectors.

However, industries such as the manufacture of whole-unit automobiles, and education and medical institutions have been added to the restricted sector.

  • Encouraged sectors have increased slightly and now include industries involved in building and operating cogeneration plants, and operating elderly care facilities. Most significantly, caps on foreign ownership ratios have been removed in several sub-sectors related to manufacturing automobile electronic components, technology for oil exploration, paper production, manufacturing civil airplanes and vessels, building and operating rail transit, international maritime transport, and accounting and auditing services —although these last services still require a Chinese chief partner.

Date of issue: March 10, 2015. Effective date: April 10, 2015