China’s 2022 Negative List for Market Access: Restrictions Cut, Financial Sector Opening, Apr. 12, 2022.
China’s 2022 Negative List for Market Access has opened more sectors of its economy to private investment. We go over key changes in the policy and discuss the further liberalization of the financial sector.
China has opened more sectors of its economy to private investment, per a new update to the Negative List for Market Access.
The negative list is a document that delineates industries that are prohibited or restricted to private investment by companies in China. Any industry not included on the list is presumed to be open to investment without requiring additional administrative approvals.
On March 25, 2022, the National Development and Reform Commission and the Ministry of Commerce jointly released an updated version of the negative list. The updated list, which came into effect immediately, covers 117 industries, down from 123 in the 2020 list.
The Negative List for Market Access applies to both foreign and domestic investors alike. It is not to be confused with the Special Administrative Measures (Negative List) for Foreign Investment Access and the Special Administrative Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones, which are separate negative lists that apply exclusively to foreign investors.
What are the new changes?
The changes in the new negative list primarily affect the financial sector, representing a gradual opening of more industries for private investment. Here, we go over the major changes and the implications for foreign investors.
More restrictions cut
The updated negative list cuts the number of industries with restrictions from 123 in 2020 to 117. This continues the trend of gradual reductions in restrictions. The negative list had 131 in 2019 and 151 in 2018, the first year the list existed. Chinese regulators first introduced the negative list to consolidate and streamline regulatory restrictions and adopt a more open market outlook.
The new negative list removes restrictions on stock issuance, mergers and acquisitions of listed companies, and internet financial information services. Now, investors no longer need prior approval to participate in these industries.
The changes to the negative list mean that all market entities can access these industries equally, and do not require special approval to enter. However, they still must comply with relevant regulations, which vary by industry.
New restrictions on news media
Although the updated negative list lowers the total number of industry restrictions, it also introduced a handful of new ones in the news media sector.
Namely, the negative list no longer allows for private investors, without special approval, to conduct news gathering, editing, and broadcasting operations; invest, establish, or operate any form of news agency; or publish news reported by foreign entities.
The news media sector was already extremely restricted in China – especially for foreign investors – and the changes only reinforce this status.
How does the Negative List for Market Access work?
Similar to previous years, the 2022 Negative List for Market Access continues to include two categories: prohibited and restricted markets.
For the prohibited list, market players are forbidden from engaging in these industries, fields, and businesses in any way – whether it be in the form of investments, partnerships, or takeovers.
Market players wishing to enter “restricted” categories must do so by filing an application for access to the relevant administrative organs as per the laws and regulations.
So, foreign investors need to consult both the negative list for foreign investment (FI negative list) and the market access negative list to know whether they can invest in their industry, field, or business of choice.
The 2022 Negative List for Market Access has six prohibited items:
Negative List for Market Access (2022 Edition): What Has Been ProhibitedProhibited itemsDescription
(To be continued)