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Focus China: News & Information for Investors, Entrepreneurs
and Businessmen from Tax Consultants, Accountants, and Lawyers

China shortens the negative list again

Category: Investments, Miscellaneous, July 24th, 2019


In a recent step further in opening up the Chinese market, the National Development and Reform Commission (NDRC) and the Chinese Ministry of Commerce (MOFCOM), announced a shortened “Negative List” on June 30th, 2019. This list is known to govern the foreign investment in China. It imposes restrictions on certain sectors. After the recent revision, the number of restricted sectors has been reduced to 40 from 48 previously. These changes come after the new “cease fire” in the US-China trade war.

These three documents will take effect on July 30 this year:

  • Special Administrative Measures for Access of Foreign Investment (Negative List), and
  • Special Administrative Measures for Foreign Investment Access in Pilot Free Trade Zones (Negative List for Free Trade Zones).
  • Catalog of Industries for Encouraged Foreign Investment


Main changes compared to the previous negative lists

The followings are the changes when compared to the negative list issued last December:

  1. The service sector will see greater openings in transport, infrastructure, culture, and value-added telecommunications.

The following industries will not have to be controlled by a Chinese partner anymore:

  •  domestic shipping agencies,
  • gas and heat pipelines in the cities with a population of more than 500,000,
  • cinemas and performance brokerage institutions,
  • valued-added telecommunication services such as domestic multi-parties communications, store-and-forward and call center services.

The ban on foreign investment in value-added telecommunications services such as telephone and video conferencing, store and forward and call center services will be lifted.

  1. Market access will be eased in agriculture, mining, and manufacturing industries.
  • Prohibition on foreign investment in the exploitation of wildlife resources, the exploration, and development of petroleum and natural gas are limited to Chinese-foreign equity joint ventures or non-equity joint ventures.
  • The exploration and exploitation of molybdenum, tin, antimony, and fluorite and the production of Xuan paper and ink ingots will be canceled.

The version of the negative list applicable to free trade areas also removes restrictions on foreign investment in sectors such as water products, fisheries, and publication printing.

Catalog of Encouraged Industries

In the catalog of encouraged industries, the Chinese government added many new items that show the preference for the high-end manufacturing industry. These include 5G core components, etching machines for integrated circuits, chip packaging equipment, cloud computing equipment, new energy vehicles, key components of intelligent vehicles, key raw materials of cell therapeutics, and more.

Other than these three documents, the MOC is combing through other regulations, which are not consistent with or diverge from the new negative lists and the new Foreign Investment Law. This is to make sure that these documents and the law will be executed smoothly.

As President Xi again pointed out at the G20 Summit, the Chinese government aims to attract more foreign investors, improve China’s investment environment and provide foreign investors a fair field with the national players competing in this huge market.

Original documents (in Chinese)

  • Negative List 2019 Edition: Special Administrative Measures for Access of Foreign Investment (《外商投资准入特别管理措施(负面清单)(2019年版)》)
  • Free Trade Zones Negative List: Special Administrative Measures (Negative List) for Foreign Investment Access in Pilot Free Trade Zones (2019 Edition) (《自由贸易试验区外商投资准入特别管理措施(负面清单)(2019年版)》)
  • Investment Catalogue: Catalog of Industries for Encouraged Foreign Investment (2019 Edition) (《鼓励外商投资产业目录(2019年版)》)


Website: https://ecovis-beijing.com

China’s Cryptocurrency and Blockchain Regulatory Environment

Category: Miscellaneous, May 15th, 2019

China’s cryptocurrency market – We give you an overview of legal regulations and tax implications in terms of Bitcoin-related business. 

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Legal update China: new laws and regulations in 2019

Category: Legal, February 26th, 2019

Regulatory change often comes quickly in China – and the year ahead will be no exception. Some major legal changes already came into effect on January 1st, 2019, whilst others are still in the pipeline.

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Data Protection in China

Category: Miscellaneous, April 12th, 2018

On 1 May 2018, new standards will come into force that further clarifies the data protection rules of the Cyber Security Act.
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Accounting in China

Category: Accounting, Compliance, Miscellaneous, November 30th, 2017

Accounting in ChinaThe Chinese Generally Accepted Accounting Principles (China-GAAP) are similar to the International Financial Reporting Standards (IFRS), but differ from the American accounting system (US-GAAP). Most foreign companies are unaware of these differences, and are, therefore, running the risk of non-compliance.

This article intends to offer you a brief introduction to the most basic Chinese accounting features, in order to help you make your China venture a complete success.

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China’s New Point System for Expats

Category: HR, Legal, Visa, March 30th, 2017

On 9 September 2016, the State Administration of Foreign Experts Affairs published the reform of the current work visa system for foreigners in China. The changes will merge the various regulations for foreign specialists with the normal application procedures. The reform will also replace the current work permit booklet with a small card. Additionally, it implements a grading system, which will rank foreign workers according to their experience and skills.
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The Annual Compliance Review – Audit in China

Category: Audit, January 11th, 2017

The deadline for the Annual Compliance Review in China is on 31 May. Although it seems that there is still a long time until the deadline, there is an incredibly huge amount of work to do before you can hand in your annual audit reports.


China: Transfer Pricing Regulation Update

Category: Compliance, Tax policy, July 20th, 2016


On 13 July, the State Administration of Taxation issued a notice related to the long-expected adjustments in regulations of transfer pricing. With the announcement [2016] No.42, the previously valid “Implementing Measures for Special Tax Adjustments (for Trial Implementation)”, (Guo Shui Fa [2009] No. 2) effective for 8 years is partly replaced by SAT [2016] No.42 on two points:

  1. The reporting on related-party transactions (business transactions between a major shareholder and the corporation, such as a contract for the shareholder’s company to perform renovations to the corporation’s offices)
  2. Management of Contemporaneous Documentation (Actual project invoices, plans, and specifications, used to document the outlay of capital by a particular taxpayer for a particular construction project)

The third part of Guo Shui Fa [2009] No. 2 Regulation of cost sharing arrangements meanwhile stays untouched.
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Introduction to the United States tax compliance act of foreign accounts

Category: Investments, Legal, Miscellaneous, July 14th, 2016

1. What is FATCA?

The Foreign Account Tax Compliance Act is a U.S. tax law that was enacted in 2010 –

Final U.S. Treasury regulations on FATCA were issued on January 17, 2013. The regulations launched on July 1, 2014, and came into effect from 2014 to 2017. It aims to prevent U.S. tax evasion by U.S. persons through use of offshore accounts held at Foreign Financial Institutions (“FFIs”) and Non-Financial Foreign Entities (“NFFEs”). The U.S. Internal Revenue Service (“IRS”) and the U.S. Congress believe that many U.S. citizens are evading U.S. taxes by hiding their assets overseas.
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New Chinese-German tax agreement –

Category: Tax policy, July 14th, 2016

The State Administration of Tax (”SAT”), has released Tax Circular No. [2016]37 and the Interpretation of double agreement on taxation between China and Germany (“DTT”) on 16 June 2016. Tax circular 37 informs the new DTT will be in effect from 1 January 2017 onwards as the new tax agreement is approved by both governments.

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