At a key 2013 meeting on setting a blueprint for reform,senior Communist Party officials called for a decisive role for the market in economic development. The Decision on Some Major Issues Concerning Comprehensively Deepening the Reform,adopted at the Third Plenary Session of the 18th Central Committee of the Chinese Communist Party,set out the need for establishing "fair,open and transparent market rules" with uniform market access. The final document adopted at the meeting also called for the use of a "negative list" system whereby enterprises could enter all areas of the market that were not on a proscribed list.

The negative list concept,which allows domestic and foreign investment in all areas that are not specifically designated as off-limits,is an important reform in ensuring market access and overhauling the mechanism used by the government to manage the economy. It is closely connected to the effort to expand the opening up of the economy and construct a truly market-oriented economic system that will  bring China more closely in line with international norms. It will also require substantial changes in the way the government conducts itself and the task will not be easy.

This paper takes an in-depth look at the advantages of the negative list concept. It also uses the experience of the China (Shanghai) Pilot Free Trade Zone and similar efforts elsewhere to make proposals for the promotion of a more innovative trade and investment management system.

Significant Reform