Guidelines on market access

In April 1 2011, the State Council issued a draft of the newest Foreign Investment Industrial Guidance Catalogue (外商投资产业指导目录 (修订徵求意见稿)) (the Draft Catalogue), jointly prepared by the National Development and Reform Commission and the Ministry of Commerce. The Draft Catalogue is expected to be approved and promulgated in June or July this year and will provide widely-anticipated guidelines on market access and industrial policies for foreign investment. As the sixth edition (following the previous 1995, 1997, 2002, 2004 and 2007 versions), the Draft Catalogue, once approved, will serve as an important directory for foreign investors entering China over the next few years.

The Draft Catalogue has maintained the structure of previous editions, with three major categories for foreign investment: “encouraged,” “restricted” and “prohibited”. Industries not listed will fall under the default category of “permitted”. As a general rule, foreign-invested projects under the “encouraged” category will be entitled to more tax incentives and subject to less onerous administrative formalities than the others.