In June，China’s National Development and Reform Commission (NDRC) and the Ministry of Commerce jointly issued three documents to encourage foreign investment，reducing the scope of sectors barred to foreigners and expanding areas where investment is encouraged. The three policy documents -- the Special Administrative Measures (Negative List) for Foreign Investment Access (2019 Edition)，the Special Administrative Measures (Negative List) for Foreign Investment Access to the China (Shanghai) Pilot Free Trade Zone (2019 Edition)，and the Catalogue of Encouraged Industries for Foreign Investment (2019 Edition) -- all took effect on July 30，2019.

The latest Negative List – which denotes areas where foreigners cannot legally invest – has been made considerably shorter than in the past，while the Encouraged Catalogue，which covers areas where the government promotes foreign participation in the economy，has been expanded.

Improved Regulatory Framework

Prior to the 18th National Congress of the Communist Party of China in November 2012，foreign investment in China was regulated under the Catalogue of Industries for Guiding Foreign Investment.  The Catalogue set out three broad categories for foreign investment: encouraged，restricted and prohibited. In the following year a new approach was adopted for the regulation of foreign investment; foreigners seeking to invest in China were given national treatment before their projects were formally considered for approval. Meanwhile，a negative list was drawn up，meaning that foreign investment was barred only in areas specifically designated as off-limits. Industries previously designated as restricted or prohibited areas were initially made part of the Special Administrative Measures (Negative List) for Foreign Investment Access in 2017.  Since the creation of the negative list，the areas barred to foreigners have been gradually whittled down. “Encouraged industries” received similar treatment as in the past.  This general approach has been called “pre-establishment national treatment plus a negative list.” The issuance of the latest documents has refined this overall approach，relaxing controls on market access to foreign capital and encouraging foreign investors to enter the Chinese market.