As approved by the State Council, on 10 March 2015, the National Development and Reform Commission (NDRC) and Ministry of Commerce (MOFCOM) jointly announced the Foreign Investment Industrial Guidance Catalogue (Revised in 2015) (hereinafter referred to as “2015 Catalogue”) through NDRC/MOFCOM Order [2015] No. 22. The 2015 Catalogue will become effective on 10 April 2015 and supersede the Foreign Investment Industrial Guidance Catalogue (Revised in 2011) (hereinafter referred to as “2011 Catalogue”) that was jointly announced by the NDRC and MOFCOM on 24 December 2011.

The contents of 2015 Catalogue includes the following three sections:

• Catalogue of Encouraged Foreign Investment Industries (“Encouraged Catalogue”), which covers 349 items under 12 types of industries
• Catalogue of Restricted Foreign Investment Industries (“Restricted Catalogue”), which covers 38 items under 13 types of industries
• Catalogue of Prohibited Foreign Investment Industries (“Prohibited Catalogue”), which covers 36 items under 11 types of industries

Compared with the 2011 Catalogue, the revisions include:

1. Items covered in the Restricted Catalogue have been reduced from 79 to 38.

   • For the manufacturing sector, restrictions on foreign investments in the metallurgy of non-ferrous metals, renowned white spirit, small-scale engineering machinery, plain bearings, photosensitive materials and chloramphenicol are removed under the 2015 Catalogue.
   • For the service sector, restrictions on foreign investments in direct sales, mail order and online sales, railway freight transportation company, cross-border automobile transportation company, insurance broker company, finance company, trust company, currency brokerage company, distribution of audio visual products (excluding films), development of a tract of land, construction and operation of high-class hotels, office buildings and international conference and exhibition centers, transaction of real properties in the secondary market, real estate agent and legal consultation [with the consultation on Chinese legal affairs (excluding the provision of information related to Chinese legal environmental impact) is included in the Prohibited Catalogue of the 2015 Catalogue], company engaging in inspection, appraisal and verification of import/export commodities and operation of places of entertainment will be removed under the 2015 Catalogue.

2. Restrictions on foreign equity ratio are relaxed. Items subject to equity and cooperative joint-venture requirements are reduced from 43 to 15. Items subject to Chinese holding or control requirements (i.e., the Chinese party shall hold a dominant position) are reduced from 44 to 35.

   • For the manufacturing sector, foreign equity ratio requirements for steel, ethylene, oil refinery, papermaking, lifting machinery, ship cabin machinery, electric transmission and transformation equipment, coal chemical equipment, light helicopter, automobile electronic integrated system and renowned white spirit will be removed.
   • For the service sector, foreign equity ratio requirements for e-commerce, chain business, railway branch line, subway, light rail, marine transportation and performance venues will be removed or relaxed.

3. The number of items covered in the Encouraged Catalogue basically remains unchanged.

   • 76 items in the Encouraged Catalogue are modified with the intention of adjusting indices of encouraged projects, optimizing structures, promoting foreign investments in new technologies, processes, materials and equipment and improving the quality of foreign capital usage.
   • Construction design, elderly care institutions, construction and operation of power grid and sewage treatment plants are newly included in the Encouraged Catalogue under the 2015 Catalogue.

4. Higher education institution is moved from the Encouraged Catalogue in the 2011 Catalogue to the Restricted Catalogue in the 2015 Catalogue.

5. The 2015 Catalogue specifies in its Restricted Catalogue that, for manufacturing of whole automobiles, special automobiles and motorcycles, the Chinese equity ratio shall be not less than 50%. Such restriction on foreign equity ratio is consistent with the prevailing provisions under NDRC Order [2004] No. 8 (“Order 8”, i.e., Policy on Development of Automobile Industry).
6. Items such as auction enterprises engaging in the auction of cultural relics, cultural relic stores are newly moved to the Prohibited Catalogue under the 2015 Catalogue, which is consistent with the prevailing provisions under Chairman Order [2013] No. 5 (“Order 5”, i.e., Notice regarding amendments to 12 laws including the Law of the People’s Republic of China (PRC) on Protection of Cultural Relics).

Effective date and transitional arrangements

The 2015 Catalogue will become effective on 10 April 2015 and apply to foreign investment projects that are approved or have filed a record on or after this date, while the 2011 Catalogue applies to foreign investments projects that are approved or have filed a record before this date.

Below link the full content of the 2015 Catalogue: http://www.sdpc.gov.cn/zcfb/zcfbl/201503/t20150313_667332.html

Below link the full content of the 2011 Catalogue: http://www.mofcom.gov.cn/article/b/f/201112/20111207907901.shtml