China's Encouraged Industries - A Detailed Explanation

by Dezan Shira & Associates, National Investment Intelligence Unit, ,

The main purpose of China's development policy is to absorb foreign funds and attract advanced technology and skills - as Government officials put it, "meeting the needs of the economy and social development and adjustment of industrial structure". Industries are categorised for foreign direct investment (FDI) as :

• "permitted" - any industry not listed in another category is a "permitted" industry
• "encouraged" - these include those that promote the development of agriculture, involve high technology, upgrade product quality, promote environmental protection, promote exports and which will help in the development of the poorer and less-developed interior regions - this is the focus of this article
• "restricted" - these industries include those that are technologically backward, environmentally unfriendly or industries that are being opened up to foreign investment on a pilot basis
• "prohibited" - these industries are those that use technology unique to China or, not surprisingly, which harm the national interest, are damaging to the environment or human health, jeopardise security or are politically sensitive

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This article included in China Briefing Magazine
May 2006: China's Encouraged Industries