CBL’s Introduction

CBL’s translation of the foreign investment access exceptions list describes China’s unique approach to investment access regulation. A pertinent part of these exceptions is a fairly extensive list of exceptions to the equal market access provided by the Foreign Investment Act. Prospective China investors considering opportunities in the country, should review the list to determine if their proposed investment will be permitted in China.

Special Administrative Procedures for Foreign Investment Access (Exception List) (Issued 2021)

1. Special Administrative Procedures for Foreign Investment Access (hereafter referred to as the “Foreign Investment Access Exception List”) provides a policy for foreign investment access, such as rules about controlling shares and who may be executive managers. The principle of fair and equal treatment for both domestic and foreign investments shall be applied to all industries and sectors excluded from the Foreign Investment Access Exception List. The rules in the Exception List for Market Access shall be applied to both domestic and foreign investors.
2. No foreign investor may engage in business operations or investments as a shareholder or act as a sole proprietor or a member of a farmer’s cooperative.
3. Foreign owned entities investing in China shall comply with the requirements set forth in the Foreign Investment Access Exception List.
4. Foreign investors who fail to meet the requirements stated in the Exception List for Foreign Investment shall be denied business entity registration and licensing by the jurisdictional agency. Foreign owned partnership entities shall not be formed in industries with equity requirements.
5. The Foreign Investment Access Exception List restrictions may be waived with approval from the jurisdictional agency and the State Council.
6. Jurisdictional agency approval is required to issue stock or list on an exchange of mainland China for any domestic entity whose activities fall under the Foreign Investment Access Exception List. Foreign investors may not be involved in such companies’ management; shareholding ratios will be governed by regulations governing the foreign investors’ domestic securities investments.
7. Acquisitions of a domestic business by its domestic affiliated business, entity, or natural person and foreign entity owned by the natural person shall be subject to applicable foreign investment, overseas investment, and foreign exchange administrative regulations.
8. The current and existing regulations shall be implemented and applied to cultural and financial industries not covered by the Foreign Investment Access Exception List (or other regulations for administrative approvals, qualifications, and national security).
9. Regulations that provide foreign investors preferential access other than the Mainland and Hong Kong Closer Economic Partnership Arrangement, Mainland and Macao Closer Economic Partnership Arrangement, Cross-Straits Economic Cooperation Framework Agreement, and their respective amendments, or other international treaties or agreements to which China is a party. Further trade liberalization rules may be adopted for qualified investors in Special Economic Zones and Pilot Free Trade Zones.
10. The National Development and Reform Commission, the Ministry of Commerce, and other appropriate agencies are responsible for the interpretation of the Foreign Investment Access Exception List.
11. The Foreign Investment Access Exception List (2020 Edition) issued on June 23, 2020, by the National Development and Reform Commission and the Ministry of Commerce shall be repealed on January 1, 2022.

Special Administrative Procedures for Foreign Investment Access (Exception List) (2021 Edition)