Email Service Notes 8th December (Tony)

Original –

On Dec 7, the NDRC published a revision draft regarding revising the country’s guidance catalogue for foreign investment (“Draft”) on its website to seek public opinion on the changes.

The main changes of Draft are as below:

First, the Draft shows that China will promote the policy of opening to the outside world. According to the Draft, on the basis of substantial liberalization last year, Chinese authorities are considering, cutting the number of restrictive measures for foreign investment to 62 from the previous 93(including 19 encouraged industries, 38 restricted industries and 36 prohibited industries).

The focus of the service sector is to liberalize the industries regarding passenger transport, credit investigation and rating services. The manufacturing sector will focus on liberalization of market access restrictions regarding the production and manufacture of railway transportation equipment.

For the manufacture of whole vehicles and special vehicles, the Draft mentioned that the Chinese shareholder should hold more than 50% shares in the Joint Venture, and it can only establish less than two (including two) Joint Ventures in China with the same foreign enterprise to produce similar (passenger vehicles, commercial vehicles) whole vehicle products. In case of foreign shareholder and Chinese shareholder of the Joint Venture jointly merge other automobile manufacturers; the restriction of two can be removed.

In addition, in the Draft, foreign investors are encouraged to invest in the fields of manufacture and construction of Research & Development institution for automobile engine.

Correction –

On Dec 7, the NDRC published a revision draft regarding a revision to the country’s guidance catalogue for foreign investment on its website to seek public opinion on the changes.

The main changes to the draft are as follows:

First, the draft shows that China will promote the policy of opening to the outside world. According to the draft, on the basis of substantial liberalization last year, Chinese authorities are considering cutting the number of restrictive measures for foreign investments to 62 from the previous 93 (including 19 encouraged industries, 38 restricted industries and 36 prohibited industries).

The focus of the service sector is to liberalize the industries regarding passenger transport, credit investigation and rating services. The manufacturing sector will focus on liberalization of market access restrictions regarding the production and manufacture of railway transportation equipment.

For the manufacture of whole vehicles and special vehicles, the Draft mentioned that the Chinese shareholder should hold more than 50% shares in the Joint Venture, and it can only establish up to two Joint Ventures in China with the same foreign enterprise to produce similar (passenger vehicles, commercial vehicles) whole vehicle products. In the case of a Joint Venture which merges or acquires another company; the limit of two Joint Ventures can be removed.

In addition, in the Draft foreign investors are encouraged to invest in the fields of manufacturing and construction of Research & Development institutions for automobile engines.