Second Batch of Pilot Areas Submit Overall Market Access Plans to State Council

On 21 September 2017, Xinhua News Agency reported that the second batch of pilot districts (including Zhejiang and Hubei areas) are formulating and submitting their overall plans to the State Council with a view toward fully implementing China’s new negative list system for administering market access by 1 January 2018.

Once implemented, the national negative list for market access will apply certain special administrative measures equally to both foreign and domestic investment. In April 2016, the National Development and Reform Commission (“NDRC”) released a draft version to be piloted in Shanghai, Tianjin, Guangdong and Fujian.

The proposed overall plans to the State Council are working to:

  • Revise or revoke local rules and regulations that are inconsistent with the new market access system.
  • Improve the mechanisms for administrating market access in their respective jurisdictions.
  • Suggest adjustments to the national negative list for market access.

The report suggests that the shift toward allowing the market to play a decisive role in China’s economy, as well as the corresponding liberalisation of prevailing market access restrictions, are viewed as necessary steps to allow China to remain competitive in the international economic arena.

Market Reaction

Ren Qing, Partner, Global Law Offices, Beijing

“The government is keen to ensure that China remains a competitive international destination for foreign direct investment. Specifically, the report highlights the government’s intent to pilot the new market access approach in select administrative regions nationwide well ahead of its self-imposed January 2018 deadline.”

Action Items

No specific action is required because of this development, but General Counsel should continue to monitor the government’s progress in implementing the new approach to market access, both nationally and regionally, to identify potential opportunities to invest or to renegotiate or restructure existing arrangements.