Shanghai Releases ‘Negative List’ for Foreign Investment in Shanghai Free Trade Zone

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Sept. 30 – The Shanghai Municipal People’s Government released the “Special Administrative Measures on the Entry of Foreign Investment into China (Shanghai) Free Trade Zone (2013 Negative List) (hereinafter referred to as the ‘Negative List’)” on September 30, which details the different treatment for foreign investors and Chinese investors in the Shanghai Free Trade Zone (Shanghai FTZ). Detailed information can be found below.

According to the “General Plan for the Shanghai Free Trade Zone,” a “negative list” approach towards foreign investment management will be adopted in the Shanghai FTZ, meaning foreign investment in all sectors should be allowed unless listed as prohibited or restricted under the Negative List.

Moreover, foreign investment into the areas beyond the Negative List will only have to go through record-filing procedures with the relevant authorities, rather than seeking approval as in the past. The list covers the following 16 service sectors and details 190 management measures:

  • Agriculture, Forestry, Animal Husbandry and Fishery Industries
  • Mining Industry
  • Manufacturing Industry
  • Production and Supply Industries for Power, Gas and Water
  • Construction Industry
  • Wholesale and Retail Industries
  • Transportation, Warehousing and Postal Service Industries
  • Information Transmission, Computer Service and Software Industries
  • Finance Industry
  • Real Estate Industry
  • Leasing and Commercial Service Industries
  • Scientific Research and Technical Service Industries
  • Water Conservancy, Environmental, and Public Facilities Management Industries
  • Education Industry
  • Health and Social Industries
  • Cultural, Sports and Entertainment Industries

The list is longer and more restricted than the market had expected, and foreign investors are still banned from investing in the country’s tightly-controlled cultural, sports and entertainment industries, specifically:

  • New agencies;
  • Radio and film companies;
  • Publishing of newspapers, magazines and books;
  • Production of electronic publications;
  • Gambling;
  • Internet bars; and
  • Construction and operation of golf parks.

Moreover, foreign investment is restricted in the telecommunication and satellite transmission service industries, so is foreign involvement in high-end properties such as offices, hotels and convention centers.

However, the list allows Sino-foreign joint ventures in the following industries:

  • Exploration of shale gas and sea-bottom natural gas;
  • Auto parts and aircraft maintenance; and
  • Railway construction and management.

The list, which comes into effect immediately, is a temporary version for 2013 and will be updated based on future conditions.

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