The domestic perspective

Where to invest

The Shanghai FTZ was first launched in September 2013. Based on its successful model, this year the Chinese government rolled out the reform to set up three more Free Trade Zones in Guangdong, Tianjin and Fujian and to expand the Shanghai FTZ to include Lujiazui, Jinqiao and Zhangjiang in addition to four existing areas (Shanghai Waigaoqiao Bonded Zone, Shanghai Waigaoqiao Bonded Logistics Zone, Yangshan Bonded Port Area and Shanghai Pudong International Airport Comprehensive Free Trade Zone).

Each of the four zones has its own unique features according its geographic location. The Shanghai FTZ, as the first FTZ in China and located in the country's economic hub, will continue to take the lead in opening up reforms in investment and trade facilitation and currency convertibility. The Guangdong FTZ, which is adjacent to Hong Kong and Macau, aims to promote economic integration (especially service trade liberalisation) between the mainland and the two SARs. The Tianjin FTZ, which is next to China's political centre Beijing, aims to coordinate the development of the Beijing-Tianjin-Hebei region. Lastly, the Fujian FTZ, which neighbours Taiwan, aims to further cross-strait economic cooperation.

When deciding on which FTZ to invest, investors may also consider each zone's industries and areas of focus.

Sectors off limits

On April 20 2015, the State Council issued the Special Administrative Measures for Foreign Investment Access in Pilot Free Trade Zones (Negative List) (2015 Negative List). This applies to all four FTZs and comprises only 122 special administrative measures for foreign investment, down from 139 measures in the 2014 Negative List and 190 measures in the 2013 List.

Prior to the issuance of the 2015 Negative List, on March 13 2015, the National Development and Reform Commission and Ministry of Commerce jointly promulgated the Foreign Investment Industrial Guidance Catalogue (Amended in 2015) (外商投资产业指导目录) (2015 Catalogue) to apply to foreign investment outside the FTZs.

Compared with the 2015 Catalogue, the 2015 Negative List has lifted certain restrictions and prohibitions for foreign investment in the following sectors: