• Professional News
  • 06 November 2013

Negative List released for Shanghai Free Trade Zone

The Shanghai Municipal People’s Government has released the 2013 Negative List, which details the treatment of foreign and Chinese investors in the Shanghai Free Trade Zone.

On 30 September 2013, the Shanghai Municipal People’s Government released the “Special Administrative Measures on the Entry of Foreign Investment into China (Shanghai) Free Trade Zone” – also known as the 2013 Negative List. The Negative List details the treatment of foreign investors and Chinese investors in the Shanghai Free Trade Zone (Shanghai FTZ).

According to the General Plan for the Shanghai FTZ, a “negative list” approach towards foreign investment management will be adopted in the Shanghai FTZ. This means that foreign investment will be allowed in all sectors except for those listed as prohibited or restricted under the Negative List. Moreover, foreign investment in sectors that are not covered by the Negative List must only go through record-filing procedures with the relevant authorities, rather than seeking approval as has been required until now.

The Negative List covers the following service sectors:  

  • Agriculture, forestry, animal husbandry and fishing industries
  • Mining industry
  • Manufacturing industry
  • Production and supply industries for power, gas and water
  • Construction industry wholesale and retail industries
  • Transport, 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  
  • 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, particularly:

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

Moreover, foreign investment is restricted in the telecommunication and satellite transmission service industries, and so is foreign involvement in high-end properties such as offices, hotels and conference centres. 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
  • Railway construction and management.

The Negative List, which has already come into effect, is a temporary version for 2013 and will be updated based on future conditions.

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