Page 86 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
back, since China introduced foreign-capital banks to Access” was included in the 2017 version of the Foreign
the domestic market, domestic commercial banks have Investment Industrial Guidance Catalogue, one of the
learned a lot from competition and helped China’s fundamental rules regulating the sector in China. The
financial sector in terms of product evolution, market list, also called “Special Administrative Measures,” names
building, business models, management expertise. 35 industries under a restricted category. In addition, it
China’s banks also have improved a lot in terms of tallied another 28 sectors under the prohibited category,
efficiency, asset quality and corporate governance such as air traffic control, film production and distribution,
through competition-driven equity reforms and public and Internet news information services. It was the first
offering,” said Zhou. China’s financial institutions, which directory that has explicitly been named a “negative list”
are also “going global”, have benefited, said Zhou. “A lot on foreign investment for the whole country. A draft of
of domestic financial institutions have entered the global the list was released for public comment in December
market and have adapted to international competition, 2016. The draft covered all but humanities and social
and have experienced substantial changes, particularly sciences research under the prohibited category in the
in terms of risk management, pricing, and anti-money final version. The introduction of the negative list has
laundering,” said Zhou. Development and healthy trends been viewed as a move to ease market access for foreign
in China’s financial market have attracted the attention investors because projects that do not fall within the list
of the international bond market and emerging market only need to be registered with the government and no
index institutions, which illustrates that the financial longer require official approval. The government has been
services sector is competition-driven and has benefited publishing the foreign investment catalogue since 1995.
from opening up. “China’s financial services sector ... is The 2017 version is its seventh edition. The catalogue
going to further open up,” he said (Wu). has traditionally classified industries under encouraged,
restricted and prohibited categories, and those industries
Ministry of Commerce Spokesman Sun Jiwen left out of the document have been regarded as those
announced in May 2017 that China would further that foreign individuals or companies are “permitted” to
relax foreign investment restrictions in key sectors invest in. In 2017, there were a combined 63 industries
including automobile manufacturing, electric vehicle under the restricted or prohibited categories, or the
batteries, and motorcycles. Sun made the remarks when negative list, compared with a total of 93 sectors under
responding to a question about recent comments from the same categories, as well as the encouraged category
the German Minister of Economic Affairs and Energy with limits on foreign equity holdings in the previous
that China’s market is not truly free, especially in the version of the catalogue from 2015 (Wang, China to Roll).
auto industry. German carmakers were forced into joint
ventures to gain a foothold in Chinese market, while Meng Wei of the National Development and Reform
Chinese companies were able to operate abroad, Brigitte Commission, said China would open the world’s second
Zypries, adding that unless Beijing guarantees more largest economy wider to foreign investors, stepping
on free trade and fair competition, Germany would not up efforts to attract more foreign funds. She said the
sign a joint trade statement at the Belt and Road Forum. government will stick to its pledges to create a more fair
Most sectors in China were completely open to foreign and open business environment and will make use of
investors, said Sun, noting that only a few “sensitive” the experience gained in free trade zones in other parts
sectors have restrictions on foreign investment, but the of China. Enterprises in sectors that can help the nation
government has sought to gradually open them up advance through industrial upgrades are expected to
more to foreign investors. “German auto companies have take the lead in future preferential policies, according
been one of the largest beneficiaries of China’s opening to experts. As China puts high emphasis on sustainable
up, and have earned substantial returns,” said Sun. In an development and moving away from relying on old
interview with Caxin, Germany’s Ambassador to China smokestack industries, granting more market access to
Michael Clauss called for more equality in bilateral trade, foreign companies in such sectors as new energy vehicles
urging China to open up more of its market to form an is a future trend, according to John Zeng, Managing
equal partnership (Chen and Song). Director of LMC Automotive Shanghai. Zeng cites the
example of a joint venture approved by the government
China published its first nationwide negative list for between Germany’s Volkswagen and China’s JAC Motors
foreign investment in June 2017 that took effect the in May 2017. The two are working to produce electric cars
following month. A “Negative List on Foreign Investment under a new brand. Zeng said he expected there would
86
back, since China introduced foreign-capital banks to Access” was included in the 2017 version of the Foreign
the domestic market, domestic commercial banks have Investment Industrial Guidance Catalogue, one of the
learned a lot from competition and helped China’s fundamental rules regulating the sector in China. The
financial sector in terms of product evolution, market list, also called “Special Administrative Measures,” names
building, business models, management expertise. 35 industries under a restricted category. In addition, it
China’s banks also have improved a lot in terms of tallied another 28 sectors under the prohibited category,
efficiency, asset quality and corporate governance such as air traffic control, film production and distribution,
through competition-driven equity reforms and public and Internet news information services. It was the first
offering,” said Zhou. China’s financial institutions, which directory that has explicitly been named a “negative list”
are also “going global”, have benefited, said Zhou. “A lot on foreign investment for the whole country. A draft of
of domestic financial institutions have entered the global the list was released for public comment in December
market and have adapted to international competition, 2016. The draft covered all but humanities and social
and have experienced substantial changes, particularly sciences research under the prohibited category in the
in terms of risk management, pricing, and anti-money final version. The introduction of the negative list has
laundering,” said Zhou. Development and healthy trends been viewed as a move to ease market access for foreign
in China’s financial market have attracted the attention investors because projects that do not fall within the list
of the international bond market and emerging market only need to be registered with the government and no
index institutions, which illustrates that the financial longer require official approval. The government has been
services sector is competition-driven and has benefited publishing the foreign investment catalogue since 1995.
from opening up. “China’s financial services sector ... is The 2017 version is its seventh edition. The catalogue
going to further open up,” he said (Wu). has traditionally classified industries under encouraged,
restricted and prohibited categories, and those industries
Ministry of Commerce Spokesman Sun Jiwen left out of the document have been regarded as those
announced in May 2017 that China would further that foreign individuals or companies are “permitted” to
relax foreign investment restrictions in key sectors invest in. In 2017, there were a combined 63 industries
including automobile manufacturing, electric vehicle under the restricted or prohibited categories, or the
batteries, and motorcycles. Sun made the remarks when negative list, compared with a total of 93 sectors under
responding to a question about recent comments from the same categories, as well as the encouraged category
the German Minister of Economic Affairs and Energy with limits on foreign equity holdings in the previous
that China’s market is not truly free, especially in the version of the catalogue from 2015 (Wang, China to Roll).
auto industry. German carmakers were forced into joint
ventures to gain a foothold in Chinese market, while Meng Wei of the National Development and Reform
Chinese companies were able to operate abroad, Brigitte Commission, said China would open the world’s second
Zypries, adding that unless Beijing guarantees more largest economy wider to foreign investors, stepping
on free trade and fair competition, Germany would not up efforts to attract more foreign funds. She said the
sign a joint trade statement at the Belt and Road Forum. government will stick to its pledges to create a more fair
Most sectors in China were completely open to foreign and open business environment and will make use of
investors, said Sun, noting that only a few “sensitive” the experience gained in free trade zones in other parts
sectors have restrictions on foreign investment, but the of China. Enterprises in sectors that can help the nation
government has sought to gradually open them up advance through industrial upgrades are expected to
more to foreign investors. “German auto companies have take the lead in future preferential policies, according
been one of the largest beneficiaries of China’s opening to experts. As China puts high emphasis on sustainable
up, and have earned substantial returns,” said Sun. In an development and moving away from relying on old
interview with Caxin, Germany’s Ambassador to China smokestack industries, granting more market access to
Michael Clauss called for more equality in bilateral trade, foreign companies in such sectors as new energy vehicles
urging China to open up more of its market to form an is a future trend, according to John Zeng, Managing
equal partnership (Chen and Song). Director of LMC Automotive Shanghai. Zeng cites the
example of a joint venture approved by the government
China published its first nationwide negative list for between Germany’s Volkswagen and China’s JAC Motors
foreign investment in June 2017 that took effect the in May 2017. The two are working to produce electric cars
following month. A “Negative List on Foreign Investment under a new brand. Zeng said he expected there would
86
