While the number of newly registered foreign invested enterprises (FIEs) in China continues to grow year-on-year, FDI has not kept pace. A slight annual decline in FDI reflects the long-term shift of foreign investment from manufacturing into the service sector. The Chinese government understands the importance of FDI to the country’s economy, and at a July 2017 meeting it proposed measures to encourage more of it. Negative list system With the creation of the Shanghai Free Trade Zone in 2013, a ‘negative list’ system was established, which outlines the sectors where foreign investments are restricted. Since then, five other free trade zones (FTZs) have been created, and the negative list method has been adopted in all cases. In tandem, these negative lists have been modified to allow foreign investment participation in a wider range of industries and project types, and the negative list method is now also used outside the...
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