On January 27, 2014,  China’s Ministry of  Transport announced  the Trial Implementing  Measures for Increasing  the Proportion of  Foreign Investment in  International Shipping  and International Ship  Management in the Free Trade Zone (the  Decree), which became effective immediately.  

Foreign investors have been permitted to  establish Sino-foreign shipping businesses in  China since 2001 by establishing joint ventures  with Chinese partners. However, these were  subject to a 49% foreign ownership cap. Under  the Decree, these businesses (i.e., serving  international ports from China) can now be  incorporated in the Shanghai Free Trade  Zone (FTZ) without any restriction on foreign  ownership.

Furthermore, the Decree permits the chairman  and general manager of such businesses to  be appointed by either party instead of by the  Chinese partner as previously required.  

The Decree also allows foreign investors to  establish both wholly foreign-owned and  joint venture international ship management  businesses in the FTZ. Outside of the FTZ, such  businesses must still be in the form of joint  ventures.

Such incremental changes as these can hardly  be regarded as bold reform, but do reflect the  Chinese government’s eagerness to attract  more foreign capital and know-how into its  hidebound shipping industry.