China opens more sectors to foreign investment

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China opens more sectors to foreign investment
 
Beijing: China has reduced the number of sectors and economic activities under restriction for foreign investors and firms in another step towards opening the economy, authorities said on Sunday.

The National Development and Reform Commission on Sunday published an updated “negative list” of sectors restricted for foreign investment, which now consists of 40 activities with restricted or no access to foreign investment, down from the 48 items mentioned in the last list, which came into effect in July 2018, reports Efe news.

The NDRC specified that it was no longer mandatory for domestic agencies of shipping, piped gas and heating in cities of more than 500,000 people to be controlled by Chinese entities.

Wider investment access has also been granted in exploration and development of oil and gas, agriculture, services, mining and manufacturing.

Foreign investors are also expected to be allowed to develop businesses as majority shareholders or on a freehold basis, having been forced until recently to collaborate with local companies in order to operate in most sectors in China.

The new list will come into effect from July 30.

The decision comes just a day after Chinese President Xi Jinping and his US counterpart Donald Trump agreed to resume trade talks to resolve the one-year-old trade war in a meeting on the sidelines of the G20 summit in Japan’s Osaka.

A reduction in the number of sectors or activities where foreign investment is banned or restricted has been one of the main demands of foreign companies active in China, especially European and US firms.

These companies, along with their governments and institutions of the European Union, have complained to Beijing about the lack of reciprocity in market access, given that Chinese companies enjoy subsidies and many other freedoms to operate, invest and buy entities in their territories.

Saturday’s meeting between Trump and Xi showed their intent to return to the table after the apparent breakdown in negotiations in May and the subsequent exchange of tariff hikes.

As a result of the meeting, Washington suspended the imposition of further tariffs on China and agreed to allow US companies to sell products to Chinese telecom giant Huawei, which was put on a business blacklist last month.

Trump also claimed after the meeting that China had agreed to buy huge amounts of farm products from the US, although Beijing had already made such a commitment in December as part of an agreement to begin trade negotiations, reached between Trump and Xi in Buenos Aires during the last G20 summit.

The Washington-Beijing tensions have their origins in the large US trade deficit with China, as the latter exports products worth $419 billion more than it imports from its biggest trading partner, the US.

The latest escalation in the trade conflict unfolded in May when the US raised tariffs to 25 percent on Chinese imports worth $200 billion, to which Beijing responded by raising tariffs on US products worth $60 billion.

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