New administration model, 'negative list' will be established by Ministry of Commerce, regulators

China will create a new administration model and a "negative list" for foreign investors, Commerce Minister Gao Hucheng has said.

The government will treat foreign and domestic investors equally in admitting and establishing their investment projects, he said.

There also will be a "negative list" telling foreign investors what they cannot do. It will replace an investment guideline catalog that tells them what they should do.

"Foreign investors will enjoy equal treatment with their Chinese counterparts in the fields not listed on the list," Gao noted.

"Chinese leaders have seen the necessity for streamlining the investment approval procedures and opening up more fields to foreign investors, which will bring China new development opportunities and contribute to the sustainability of its economic growth," Greg Gilligan, chairman of the Beijing-based American Chamber of Commerce in China, a nonprofit organization that represents US companies and individuals doing business in China, told Xinhua News Agency.

Analysts believe the new model will bring about big changes in China's administration system of foreign funds and further improve its investment environment.

Gao said the new model, proposed as a reform target at the just-concluded Third Plenum of the Communist Party of China's 18th Central Committee, "responds to some foreign enterprises' expectations and will consolidate [their] confidence in expanding investment and even moving their research and development centers and regional headquarters to China".

In the Fifth China-US Strategic and Economic Dialogue from July 10-11, China agreed to regard the pre-establishment national treatment and negative list as a negotiation base for the first time with the United States in bilateral investment treaty talks.

The first regional negative list in China was released in late September in the China (Shanghai) Pilot Free Trade Zone. Experts believe the Shanghai list will be a model for the national version to be jointly designed by the Commerce Ministry and National Development and Reform Commission.

"The list should be short, easy to follow," Ma Yu, a researcher with the Commerce Ministry told Economic Information Daily.

"A series of foreign fund administration system reforms will follow on its heels. For example, the procedures for the investment project application, assessment and approval should be abolished according to the reform direction, and relevant rules and laws should be amended accordingly."

"The duties of the Commerce Ministry, NDRC and State Administration of Industry and Commerce should be adjusted to fit the new milestone system reform of foreign funds," Ma added.

"We will unify the rules and laws on foreign and domestic investments to keep policies on foreign funds stable, transparent and predictable to ensure a unified, fair and transparent investment entry system," pledged Gao.

As the reform plan of the Third Plenum indicates, Gao said that the Chinese government will open up finance, education, culture and medical care, and lift entry controls in architectural design, care for infants and old people, accounting and auditing, commerce and trade, logistics, electronic commerce and other service sectors.

"Opening up these fields to foreign capital is good for people's livelihoods and optimizes China's industrial structure," he said.

Moreover, thanks to the initiative to establish the Silk Road Economic Zone and China-ASEAN FTA, China's border areas with Southeast Asia, Northeast Asia and Central Asia are expected to become new growth points for China to promote foreign investment.

Data of the Commerce Ministry show that foreign investment in China totaled $97 billion from January to October, rising by 5.77 percent year-on-year and growing for nine months consecutively.

From 2000 to 2010, an aggregate of $261.7 billion had been remitted out of China as net profits of foreign enterprises, which increased by 30 percent annually, topping the 20 percent global average annual growth rate.

In return, China would like to steer more foreign capital to such areas as technology, innovation and research.