China’s State Council has announced a plan to launch ‘negative lists’ for investment in 2018, delineating areas where red tape will be cut to encourage participation by commercial entities.
The lists are designed to identify sectors and businesses that are off-limits or restricted to private investment, in some regions. Anything that is absent is open for commercial participation, according to a notification published on October 19 on the State Council’s website.
The private sector will be shunned — completely or partially — from industries concerning national security, the notification said.
The final lists will be two-tiered. One of them will focus on areas from which both domestic and foreign investors will be excluded, while the other will provide details of areas from which foreign investors will be excluded.
The areas in which foreign investments will be restricted are to be named in line with the earlier trading agreements.
China has been experimenting with negative lists in its Shanghai free trade zone (FTZ) since 2013. The lists have been revised twice in 2014 and 2015.
Wang Chenwei of China’s National Development and Reform Committee (NDRC), the country’s top economic planner, told a local paper in Beijing that the lists will hold high the spirit of the law that all is permissible unless the law says otherwise.
“This move is to further free market activities from bureaucracy,” Wang said.
Wang also warned that the implementation of the list could post a challenge to Chinese governance. He suggested that the government must keep a balance between supervision and the liberalization of the market to avoid both compromise and “glass ceiling”.
The lists will be mainly drafted and released by the State Council, which will also assess and approve local governments’ possible applications for adjustments. They will be put into trial in chosen areas starting from December 1, 2015 to the end of 2017, and will be officially spread all over the country starting in 2018.