Free-Trade Zone Negative Lists update

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A recent visit from a Ministry of Commerce (MOFCOM) official helped AmCham China members get a better hold on the opportunities available to foreign business in the four free-trade zones. Huang Feng of MOFCOM's Foreign Investment Administration Department spoke at the China World Hotel for a members-only event. He gave pertinent updates on the revised negative list and answered member questions, resulting in the following key points:

  • FTZs represent the redefinition of government’s role, aiming at a higher level of opening and alignment with international practice.
  • The practice of the FTZ goes beyond WTO rules, and prepares China for the BIT process.
  • For areas not included in the list, the government is shifting from approval for foreign investment to filing.
  • Now in FTZs, investment approval is no longer a prerequisite for obtaining business permit – both can happen independently.
  • Foreign businesses from many industries are allowed to enter first and then declare for customs purposes, suggesting a shift of focus towards during and post-event regulation that emphasizes supervision. 
  • The service area of firms in FTZ is not limited to FTZ; however businesses conducted outside the zone are regulated by respective policies of the region.

Huang also stated that the establishment of the free-trade zones is a major step for China’s economic reform and a sign of increasing openness of the Chinese market to foreign business. The core value of the FTZ piloting project could be summarized as liberation and facilitation. Businesses should be optimistic that the overall trend of the negative list management is to decrease the number of regulated items, as seen since the first edition in 2013. The list has decreased from 190 items in 2013 to 122 items in 2015.