How China’s Foreign Investment Negative List Works – A Guide for Investors

China’s foreign investment negative list outlines the sectors in which foreign investors face restrictions or outright prohibitions on market entry in China, enabling unrestricted access to most sectors not included in the list. This guide explains how the list works, what sectors it covers, and how it interacts with related regulations such as the Market Access Negative List and preferential arrangements for Hong Kong and Macao investors.

The Foreign Investment Negative List, officially the Special Administrative Measures for Foreign Investment Access (Negative List) (hereafter, FI Negative List), is one of the Chinese government’s primary tools for market liberalization. The list outlines sectors in which foreign investment is either prohibited or limited, in principle enabling foreign investors to set up wholly foreign-owned enterprises (WFOEs) in any field not listed.

Over the years, the list has grown shorter as the Chinese government sought to increase market access in key sectors for foreign investors. The latest edition of the list from 2024, for instance, cut the number of restricted entries by two and removed all of the remaining manufacturing-related sectors.  

While the application of the list is fairly simple on its face, it is implemented in tandem with other industry regulations that restrict market access, most notably the Market Access Negative List, which places limits on private investment (both domestic and foreign) in certain fields. Moreover, China’s free trade zones (FTZs) implement their own version of the FI Negative List (the latest edition released in 2021), granting higher access to foreign investors, while investors from Hong Kong and Macao have access to additional preferential treatment. 

To fully assess the extent of investment permissions in China, foreign entities must consult all of these different documents to ensure investment plans comply with local market access regulations.

How the list works 

The FI Negative List includes both sectors that are completely off-limits to foreign investment and sectors in which foreign investment is limited to a certain equity ratio.  

Foreign entities investing in fields that are not included in the FI Negative List are subject to the same regulations as domestic companies, and foreign investors can generally establish a WFOE in any field not included in the list. However, certain sectors remain restricted to both domestic and foreign investors under the Market Access Negative List, meaning some sectors not in the FI Negative List may still be prohibited or require special approvals.  

The company registration authorities will not process permits, company registration applications, or other matters related to the establishment of a foreign company if a foreign investor intends to invest in any field included in the FI Negative List, in which it is either prohibited from investing or exceeds the maximum equity ratios. 

Sectors covered by the 2024 FI Negative List 

The 2024 edition of the FI Negative List includes 29 entries under 11 different industry sectors. 20 of the entries are entirely off-limits to foreign investors, while the remaining are subject to foreign equity caps ranging from 49 percent to 66 percent, or are limited more broadly to joint ventures. Some fields also have leadership requirements, such as mandatory appointment of Chinese citizens to certain positions within the company.

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China’s 23 Free Trade Zones (FTZs), in their role as a platform and testbed for liberalized trade and investment policies, apply a separate negative list from the rest of the country. The current edition of this list, officially the Special Administrative Measures for Foreign Investment Access in Free Trade Zones (the “FTZ FI Negative List”), is from 2021, and includes 27 entries across 11 fields. 

Since the 2024 edition of the national FI Negative List removed foreign investment restrictions into all of the remaining manufacturing sectors, the gap between the two lists is not as pronounced. The liberalization of manufacturing was first trialled in the 2021 FTZ negative list, and was then adopted nationwide through the 2024 National Negative List. 

Nonetheless, the FTZ negative list still offers more preferential access to foreign investment compared to the national list, with higher foreign equity caps for certain sectors. A few fields that are completely off-limits to foreign investors in other areas of China are open FTZs on an equity-limited basis, including basic telecom services, performing arts, and social surveys. 

Foreign investment access in telecom services under China’s WTO commitments 

As part of its accession to the WTO in 2001, China committed to expanding foreign investment access in a range of industries, including communication, construction and engineering, financial, education, and tourism and travel services, among others. For many of these sectors, China has since lifted all foreign investment restrictions. 

In the telecom field, however, China has maintained restrictions on foreign investment in all areas except those committed to in its WTO accession.  

For this reason, the FI Negative List restricts foreign investment in value-added telecom services that are not listed in China’s Schedule of Official Commitments (GATS/SC/135). Under this schedule, the following value-added services are open to foreign investment, with foreign equity capped at 50 percent: 

• Email
• Voice mail
• Online information and database retrieval
• Electronic data interchange
• Enhanced/value-added fax services (including store and forward, store and retrieve)
• Code and protocol conversion
• Online information and/or data processing (including transaction processing) 

Under basic telecommunication services, only pager services have been opened to foreign investment, with equity capped at 50 percent. This means foreign investment is prohibited in all other basic telecom services, such as telephone, transmission, and telegraph services However, under the FTZ Negative List, foreign investors can invest in other basic telecom services, provided the foreign equity share does not exceed 49 percent and the operator is a legally established company specializing in basic telecom services.   

Certain mobile voice and data services have been opened to foreign investment under the WTO schedule; namely, analogue, digital, and cellular services, as well as personal communication services. These sectors are also subject to a 49 percent foreign equity cap.  

Pilot program lifting ownership caps in value-added telecom services 

In April 2024, as part of the ongoing efforts to expand market access in the value-added telecom services sector the Ministry of Industry and Information Technology (MIIT) launched a pilot plan to expanding foreign investment access in internet data centers (IDCs) and other telecom services in a select number of development zones. 

Under the pilot plan, foreign ownership restrictions have been lifted on the following sectors:  

• IDCs;
• Content delivery networks (CDNs);
• Internet service providers (ISPs);
• Online data processing and transaction processing;
• Information services, including information publishing platforms and delivery services but excluding internet news information, online publishing, online audio-visual, and internet culture operations); and
• Information protection and processing services. 

During the pilot program, 100 percent foreign ownership is permitted in the above sectors in the following development areas: 

• The Beijing Comprehensive Demonstration Zone for Expanding the Opening-up of the Service Industry;
• The Lingang New Area and Leading Area for Socialist Modernization Construction of the Shanghai Free Trade Zone;
• The Hainan Free Trade Port; and
• The Shenzhen Pilot Demonstration Zone for Socialism with Chinese Characteristics

Foreign telecom service companies must apply to the MIIT for approval to carry out telecom services during the pilot program. As of the end of February 2025, 13 foreign telecom companies had received approval to carry out wholly foreign-owned telecom business under the pilot program, according to the MIIT. 

Applicability to Hong Kong and Macao 

Investors in Hong Kong and Macao are generally treated as foreign investors under mainland Chinese regulations, and are therefore also subject to the FI Negative List. However, under the Closer Economic Partnership Arrangement (CEPA) agreements that the Mainland government has signed with Hong Kong and Macao, investors from the two special administrative regions have been granted broader access in some sectors compared to investors from foreign countries and regions. Both CEPAs were updated at the end of 2024 upon the signing of amendments with Hong Kong and Macao, bringing them up to date with the 2024 FI Negative List. The amendments took effect on March 1, 2025.

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Since the release of the 2024 FI Negative List and the continued expansion of market access pilot programs in Mainland development zones, the market access gap between foreign and Hong Kong and Macao investors has narrowed. However, SAR investors still have preferential access over their overseas counterparts in a few fields. For instance, while foreign investors can only invest in basic telecom sectors within FTZs, the field is open to Hong Kong and Macao investors anywhere in China, although the 49 percent equity cap still applies. Moreover, there are no restrictions on investment in auction houses, antique shops, and state-owned cultural relics museums, and Hong Kong and Macao investors can also invest in performing arts groups, although the Mainland Chinese share must be at least 51 percent. Hong Kong and Macao investors generally have the same market access under their respective CEPAs, although Macao investors face a few more restrictions than their Hong Kong counterparts. 

The FI Negative List entries in which Hong Kong and Macao investors have broader access compared to foreign investors are listed below.

Restrictions on corporate structures for foreign investors 

Foreign investors are restricted to certain corporate structures for investment and business activities in China. Foreign citizens are not allowed to be individual business owners, set up individual industrial and commercial households (similar to a sole proprietorship in the West), or become members of farmers’ professional cooperatives.  

In the sectors in which foreign and private investment is permitted, foreign companies can set up either WFOEs or joint ventures, typically structured as a limited liability company (LLC). 

Market access negative list 

While sectors not included in the FI Negative List are generally open to foreign investment without equity caps, foreign companies are still subject to the Market Access Negative List (2025 Edition), which restricts private investment in a range of industries for both foreign and domestic investors.

The 2025 edition of the list has reduced the number of entries to 106, down from 117 in the previous edition. Of them, six are complete prohibitions, while the remaining require permits from relevant government agencies. 

Any sector not included in the Market Access Negative List is considered fully open to private investment, without the need for prior approval, allowing equal participation from both domestic and foreign market players.  

Foreign investors should check both the FI and Market Access negative lists to ensure planned investments are open to foreign investments and do not require special permits.

Dezan Shira & Associates advises on company establishment and legal incorporation across multiple Asian jurisdictions. Combined with our tax planning expertise, we offer a fully integrated corporate establishment solution.

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