China issues final list of restricted foreign investment sectors

[BEIJING] China's top economic planning agency issued a final list of restricted and prohibited industries for foreign investors, slightly elaborating on an earlier draft that had been criticised by foreign business lobbies as being too broad.

China has vowed to increase the competitiveness of its economy by loosening restrictions on its manufacturing and service sectors, as it tries to improve inefficient state-owned firms by adopting market friendly policies to stave off slowing growth.

In a preliminary list issued in November, the National Development and Reform Commission (NDRC) cut the number of sectors where foreign investment is restricted to 35 from 79, opening up areas such as real estate, steel, oil refining, paper making and premium spirits.

However, it outright prohibited foreign investment in 36 areas, with Chinese legal affairs consulting, tobacco and cultural relics businesses added to the list.

The final list, issued jointly by the NDRC and the Commerce Ministry online on Friday but set to go into effect on April 10, largely mirrored the earlier draft. The regulator kept the prohibition on foreign investment in 36 sectors, while the number of restricted industries grew slightly to 38.

"This catalogue revision suits the new situation of our country's reform, development and economic globalisation," the NDRC said in a statement accompanying the list. It said the list had already been approved by the State Council, China's cabinet.

Among the list's main aims were to "orderly advance service industry openness" and put forward a series of opening measures in the logistics, e-commerce, transportation, social services, finance and cultural sectors, the NDRC said.

The government plans to reform state-owned enterprises but has been reluctant to cede too much control over industries it deems central to national interests.

Foreign business lobbies had said the improvements in the draft were incremental and fell short of expectations, instead advocating that China adopt a much shorter "negative list" of off-limit industries while further opening access to the services sector.

The new list replaces one that was issued in 2011, and features 349 areas where foreign investment is encouraged.

REUTERS