China Regulatory Brief: FTZ Foreign Investment Negative List, Environmental Pollution Liability Insurance

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Cybersecurity Law’s critical network equipment catalogue released

The Cyberspace Administration of China (CAC), along with other bureaus such as the Ministry of Industry and Information Technology (MIIT), jointly issued the first dedicated security products catalogue on June 1, 2017.

It outlines specific critical network equipment (CNEs) such as routers, switches, servers, and programmable logic controllers, that will be subject to inspection and accreditation requirements in China’s controversial new Cybersecurity Law.

In particular, dedicated cybersecurity products subject to inspection stipulated in the rules include ones relating to integrated data backup, firewall hardware, web application firewall, intrusion detection systems, intrusion defense systems, security isolation and information exchange products, anti-spam mail products, network synthetic audit system, network vulnerability scanning products, security data systems, website recovery products, and other accredited bodies.

The catalogue itself provides that the issuing bureaus will jointly promulgate further information on how a body may become an accredited body and to provide the accreditation and certification contemplated in the catalogue.

New negative list for foreign investment in FTZs

China’s State Council has released management measures for the negative list of foreign investments in free trade zones (FTZs), which will come into effect on July 10, 2017.

The new negative list removes 10 categories and 27 restrictions for foreign investment from the 2015 list, bringing the number of items on the list down to 95.

Restrictions have been lifted for mining, manufacturing, transportation, information, commercial services, finance, scientific research, and culture sectors.

Fields not covered by the negative list, including those of national security, public order, public culture, financing regulation, and government purchases, should accord with the existing regulations.

For the open sectors for investment on the list, a foreign investment permit will be necessary. As for industries not listed in the document, foreign investors will receive equal treatment as domestic companies in China’s FTZs.

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Rules for environmental pollution liability insurance released

China’s Ministry of Environmental Protection and the China Insurance Regulatory Commission have jointly issued a circular on rules for compulsory environmental pollution liability insurance, open for public consultation until July 10, 2017.

The pollution insurance covers third-party personal damages, third-party property damages, ecological environment damage, as well as expenses for emergency response and cleanup operations.

The rules stipulate eight types of companies who will be required to buy the insurance: those engaged in the extraction of petroleum and natural gas; the gathering, storage, utilization and disposal of hazardous wastes; and the production of active pharmaceutical ingredients.

Companies who fail to buy the insurance may face fines of up to RMB 30,000 (US$4,400), and will be provided with a grace period to buy or renew the insurance. Insurance companies cannot refuse or postpone to underwrite the insurance without reasonable causes.

However, the rules require that insurance companies issue an environmental risk assessment report before signing insurance contracts.


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Dezan Shira & Associates is a full service practice in China, providing business intelligence, due diligence, legal, tax, IT, HR, payroll, and advisory services throughout the China and Asian region. For assistance with China business issues or investments into China, please contact us at or visit us at

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