China to ease restrictions on foreign investment

A new foreign investment law will ease restrictions on foreign investors and grant them easier access to the Chinese market, the Ministry of Commerce (MOC) said on Monday.

Overseas companies will receive pre-establishment national treatment and the current troublesome case-by-case approval system be replaced by "negative list" management, if the new law is passed.

Foreign investment on the "negative list" will have to apply for permission, but all investors must "report" investment to the government no matter whether they are on the list or not.

The "negative list" for foreign investment was introduced in the China (Shanghai) Pilot Free Trade Zone in September 2013. Since then, authorities elsewhere have been eager to replicate the system.

According to the new law, enterprises will not be regulated based on their ownership but on "who is in control". Foreign enterprises on the Chinese mainland that are controlled by overseas investors will be considered foreign while those controlled by Chinese investors will be regarded as such.

The MOC is soliciting public opinion on the law.