1. Minimum capital requirements further relaxed

MOFCOM issued Decree No. 2 on 28 October 2015 amending 29 ministerial- level regulations, bringing some important changes to existing regulations on foreign investments.

Notably, Decree No. 2 abolished minimum capital requirements for the following types of companies:

  • China holding company (CHC)
  • foreign-invested joint stock company (FISC)
  • foreign-invested venture capital enterprise
  • foreign-invested financial leasing company
  • foreign-invested logistics company
  • commercial factoring company

The rules relating to capital contribution in the form of equity are further relaxed. The Decree further simplifies the approval processes for strategic foreign investment into listed companies. These changes will facilitate investments in the above types of companies as well as restructuring of existing companies. Please refer to Annex I for a more detailed summary of the changes introduced by Decree No. 2.

  1. Further liberalization of investments in service sectors in Beijing

The State Council issued Circular 60 on 15 October 2015, liberalizing foreign investments in three service sectors with immediate effect, including the ever- growing outbound travel market. This policy is valid in Beijing only, and will remain effective until at least 5 May 2018 .

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In May 2015, Beijing received State Council approval to issue pilot policies aiming to open up the service industry for foreign investment. The pilot scheme envisions relaxation for foreign investment in the following areas: (1) science and technology, (2) Internet and information services, (3) culture and education, (4) business and travel, (5) financial services, (6) health and medical services.

Further to Circular 60, we would expect to see further liberalizations in other service sectors in Beijing and likely on a nation-wide basis in due course, as noted by a MOFCOM official to the state media.

  1. Application of Negative List to expand

The application of the Negative List will be expanded to all market players and on nation-wide basis under the State Council's Opinions on Implementing Market Entry Negative List Administration, issued on 2 October 2015 (Circular 55).

Currently, the Negative List method is adopted in four free trade zones 3, and for the screening of foreign investment projects only. Circular 55 envisages:

  • a new Negative List for Market Entry

In addition to the Negative List for foreign investment, a new Negative List for Market Entry will be formulated, which applies to both domestic and foreign investments. The Negative List for Market Entry will integrate and align with existing administrative approvals and measures affecting market access, as well as NDRC catalogues guiding structural adjustment of industries and verification of investment projects.

  • expansion of geographical coverage

This revamped market access system will be adopted in selected pilot regions over the next two years. Reportedly, the practice will be expanded from the costal regions to inland areas. A nation-wide roll-out is planned for 2018.

Annex I.

Summary of Notable Revisions in MOFCOM Decree No. 2

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