Investment in China
With the Foreign Investment Law of the PRC, the Special Administrative Measures on Access to Foreign Investment (2020 edition) (hereinafter referred to as ?020 National Negative List? and the Free Trade Zone Special Administrative Measures on Access to Foreign Investment (2020 edition) (hereinafter referred to as ?020 FTZ Negative list? become effective in 2020, foreign direct investment in China becomes more and more easy and convenient.
- Foreign Investment Access
The 2020 National Negative List and 2020 FTZ Negative list have enumerated the industries where foreign investment will either be prohibited or restricted. Compared to the previous versions, the two new negative lists have continued to reduce the restrictions on foreign investment access. The main changes are as follows.
In the finance sector, the restrictions on the share proportion of foreign investment in securities companies, securities investment fund management companies, futures companies, and life insurance companies have been eliminated.
In the infrastructure sector, it is no longer required that the construction and operation of urban water supply and drainage pipeline networks in a city with a population of 500,000 or more must be controlled by the Chinese party.
In the transportation sector, foreign investment is no longer prohibited in air traffic control systems.
In the manufacturing sector, the restrictions on the share proportion of foreign investment in commercial vehicle manufacturing have been eliminated. The prohibitive measures on foreign investment in the smelting and processing of radioactive minerals as well as the production of nuclear fuel are removed.
In the agriculture sector, the selection and breeding of new wheat varieties and the production of the seeds are no longer required to be controlled by the Chinese party. However, the Chinese party should hold a share proportion of not less than 34%.
In the pharmaceutical sector, the measures prohibiting foreign investment in traditional Chinese medicine decoction units have been removed in the Free Trade Zones.
In the education sector, wholly foreign-owned vocational training institutions are now allowed to be established in the Free Trade Zones.
The National Development and Reform Commission and the Ministry of Commerce of the PRC will issue new negative lists from time to time which are expected to further relax market access for foreign investment.
- Procedures for the Registration of Foreign Invested Enterprises
The basic procedures for the registration of a foreign invested enterprise in China are as follows:
(1) Name Search and Reservation
(2) Business Registration
(3) Filing of Initial Report on Foreign Investment
(4) Carving of Company Seals and Chops
(5) Opening of One RMB Basic Account
(6) Foreign Exchange Registration
(7) Opening of One Capital Account
If the business activities to be conducted by the foreign invested enterprise require special licence or permit in accordance with the laws and regulations of the PRC, the relevant license or permit shall be obtained before it is allowed to carry out the said busines activities.
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