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China releases downsized negative list for market access of 2018

Release Time:2018-12-27 09:12 Article Source:Global Times

China released on Tuesday a new negative list for market entrance of 2018, which contains 151 items that companies are banned from accessing or need to acquire a license beforehand, marking the first time China introduced the negative list on a nationwide level.

In the new list released by the National Development and Reform Commission (NDRC), the government slightly loosened its grip on certain resource-related industries such as coal and nonferrous metals as a way to boost the domestic economy as well as to deal with external pressure, Chinese experts told the Global Times on Tuesday.

China has piloted the negative list scheme in about 15 cities and provinces since 2016, after the State Council, China's cabinet, released a document on forming a nationwide negative list in October 2015.

Compared with the 2016 version, the new list is simplified, cutting 177 items in its main body but detailing the restrictive areas in an attached file.

The new list is made up of two categories: industries which companies are not allowed to enter and industries where firms must gain certification before conducting relevant business.

The list also brought in regulations involving market access in China's other industrial and investment policies.

The banned industries include sectors where Chinese laws prohibit companies from participating, projects that are banned from investment under the Catalogue for Guiding Industry Restructuring, illegal financial activities and illegal internet-related businesses.

The industries whose entry requires approval involve 18 industries including manufacturing, transportation and storage, retail and wholesale, finance as well as culture, sports and entertainment.

"The new negative list is a significant innovation in China's system as it could truly achieve the goal of 'either banned or being able to access' industries for companies," Xu Shanchang, director of Economics System Reform at NDRC, told a press briefing in Beijing on Tuesday.

The new list works for all kinds of companies regardless of whether they are State-owned enterprises or private firms, Chinese companies or foreign companies, big or small companies, Xu said.

"It offers companies equal rules, rights and opportunities," Xu remarked.

Foreign companies are still subject to the new negative list for foreign investment which takes effect in July.

For areas that do not fall under the list, foreign investors are governed under the same 2018 negative list as Chinese peers.

Li Jianwei, a research fellow at the law research center under the Shanghai Academy of Social Sciences, told the Global Times on Tuesday that the new list is a "significant push" for the establishment of a fair, open, transparent market-orientated economy as it provides equal market access and competition for all market entities.

"The negative list mechanism, in trial operation since March 2016, has proved effective for stimulating market vitality as well as pushing relevant institutional reforms," Li said.

Cong Yi, a professor at the Tianjin University of Finance and Economics, said that the Chinese government won't stop reducing the negative list in its efforts to open up the market.

He stressed that the negative list mechanism shows a transfer from a system of "approval" - where investors must apply for government approval for any investment they want to do in China - to a system of partial freedom as now they are free to invest in areas not on the list.

According to Cong, the negative list system is more beneficial to private and overseas companies, as they were generally facing a higher market threshold compared with China's State-owned companies.


In the new list, the government also loosened its grip on certain resource-related industries like coal and nonferrous metals.

For example, it has lifted an investment ban on certain mines.

Beijing has also relaxed restrictions on coal projects in provinces such as East China's Fujian and Central China's Hubei.

Chen Naixing, a research fellow with the Institute of Industrial Economics of the Chinese Academy of Social Sciences in Beijing, said that this shows the government's inclination to rely on domestic resources when it's faced with external trade pressure.

It's also a way to boost the local economy amidst downward pressure, Chen felt

"The government has made the right decision in amending policy tightness based on economic changes," Chen told the Global Times on Tuesday.

In the new list, the government also stressed that investors can't illegally invest in the finance and the internet sectors.

According to Cong, this shows the government's inclination to impose stricter management on the two sectors in the light of risky internet finance problems such as peer-to-peer lending platforms earlier this year.

Editor: 曹家宁