BOFIT Viikkokatsaus / BOFIT Weekly 2018/27

Chinese officials last week released an updated version of the "negative list," which identifies branches where foreign ownership is restricted or banned. The current list whittles the list from 63 branches last year to just 48. The new list takes effect on July 28. The list reaffirms government pledges to eliminate the ceiling on foreign ownership in certain fields of finance in 2021 and restrictions on vehicle manufacture by 2022. Branches considered strategically important remain on the list. These include mining and refining of rare earth metals, cloud computing and the oil & gas sectors.

The official announcement of the new negative list followed president Trump's announcement that he was backing off from an earlier plan to restrict Chinese investment in the US. Shortening the negative list was among the demands that the US presented in May on the current trade dispute. Having a branch deleted from negative list does not automatically translate to convenient market access for foreign firms. Foreign firms repeatedly point out that they are subject to stricter reporting and regulatory requirements than comparable domestic firms in several branches.