China: New Amendments To The PRC Foreign Investment Industrial Catalogue: Further Foreign Investment Relaxations

Last Updated: 24 July 2017
Article by Ian K. Lewis and Eileen X.D. Wang

Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) jointly issued the Foreign Investment Industrial Catalogue (amended 2017) (the "2017 Catalogue"). This is the 7th revision to the catalogue since it was first issued in 1995, effective nationwide on 28 July 2017, replacing the catalogue adopted in 2015 (the "2015 Catalogue").


China's government has continued its efforts to attract foreign investments and reform the foreign investment management system in recent years. In October 2016, a new negative list regime was introduced nationwide which envisaged a category of industries being subject to special restrictions and MOFCOM approval. No full negative list was issued however and in order to establish which investments require MOFCOM approval, NDRC and MOFCOM jointly issued a circular on 8 October 2016 (the "Circular No.22") clarifying that reference be made to the 2015 Catalogue. Subsequently, on 17 January 2017, the State Council released the Circular on Several Measures on Expanding the Opening to and Active Use of Foreign Investments (the "Guidelines"), requiring that the 2015 Catalogue be amended to liberalise (among others) the services industry, the manufacturing sectors and the mining industry.

Main Adjustments


Under the 2015 Catalogue, industries were classified under three categories, being encouraged, restricted and prohibited, with others not in the Catalogue deemed as permitted. To align this with the negative list regime and to avoid confusion regarding items subject to MOFCOM approvals, the 2017 Catalogue adjusted its structure and re-groups industries under two main sections: (a) encouraged, and (b) negative list, the section which in turn consolidates and retains three business categories from the 2015 Catalogue including (i) items in the encouraged list containing restrictive requirements on shareholding structure or senior management qualifications, (ii) items in the prohibited list, and (iii) items in the restricted list. This new structure aims to provide a clearer reference to foreign investors as to how to apply the negative list regime.


Restricted or prohibited areas of foreign investment have been greatly reduced from 93 to 63, a reduction of about 30%. Reflecting the requirements in the Guidelines, the main relaxation is made in respect of the service, manufacturing and mining sectors. Examples of several such changes are set out below:

Service Sector

  • Public road transportation service (removed as a restricted item)
  • Ocean shipping tally service (removed as a restricted item and no longer requiring shareholding structure restriction)
  • Auditing services (no longer requiring the chief representative to be a Chinese national)

Manufacturing Sector – highlighted by the lifting of limitations in the motor car industry, including:

  • Motorcycle manufacturing (removed as a restricted item and no longer requiring restrictions in respect of the shareholding structure and the size of business presence)
  • Manufacturing, research and development of electronic bus network technology (no longer requiring shareholding structure restriction)
  • Manufacturing, research and development of electronic controllers for automobile electric power steering system (no longer requiring  shareholding structure restriction)
  • Manufacturing of new energy automobile power battery (no longer requiring shareholding structure restriction)

Mining Industry

  • Exploration and development of oil shale, oil sands and shale gas (no longer requiring shareholding structure restriction)
  • Exploration and exploitation of precious metals (removed as a restricted item)

It should be noted that the deletion of certain items does not suggest that legal limitation or prohibitions are necessarily lifted, but only that the same limitation or prohibition apply to both domestic and foreign investments. For example, the gambling and lottery businesses remain prohibited regardless of where investors are based.


Circular No. 22 contemplates that the negative list regime only applies to green-field investments, and MOFCOM approval is still required in respect of acquisition by foreign investors pursuant to the Rules on Foreign Investors Acquiring Domestic Companies (the "M&A Rules"). However the negative list section in the 2017 Catalogue confirms that MOFCOM approval will apply in respect of any acquisition of affiliates within China by offshore entities controlled by domestic companies or individuals (the "Round Trip Acquisitions"). As clarified by the MOFCOM spokesman in the news conference held on 29 June 2017, foreign acquisitions including strategic investments in listed companies, other than Round Trip Acquisitions, will all be subject to a record-filing requirement (rather than MOFCOM approval) upon the effectiveness of the 2017 Catalogue. This change expands the scope of the application of the negative list and shortens the list of matters requiring MOFCOM approval.


Some new items have been added to the encouraged list including research, development and manufacturing of VR and AR equipment, key parts of 3D printing equipment, reflecting government efforts to encourage creative technology.

What Comes Next?

Following the issuance of the 2017 Catalogue, it can be expected that a series of amendments to relevant regulations will follow, reflecting relaxations made in the catalogue. For example, while relaxation have been introduced regarding motorcycle manufacturing, such limitations contemplated under the Automobiles Industry Development Policy (amended 2009) now also need to be adjusted. Another example concerns the construction and operation of theme parks. The prior position was that theme parks were restricted and subject to MOFCOM approval (although in practice a Chinese majority-owned JV was normally expected as a policy rather than law). Under the 2017 Catalogue, such restrictions have been removed as the restrictive item, and will now need to be reflected in local policy and regulation.

As suggested by the MOFCOM spokesman on 29 June 2017, given that the 2017 Catalogue no longer requires foreign acquisition to be subject to MOFCOM approvals, amendments to the Administrative Measures on Record-filing of Establishment and Change of Foreign-invested Enterprises (the "Administrative Measures") will be required to specify the record-filing procedures for foreign acquisition. We note that a draft of the Administrative Measures incorporating such procedures was in fact circulated for public comments back in May 2017 and can expect the same be formally issued in due course.

Visit us at

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions