New Catalogue for the Guidance of Foreign Investment Industries released

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SHANGHAI, Nov. 7 – The Ministry of Commerce and the National Development and Reform Commission jointly released the latest Catalogue for the Guidance of Foreign Investment Industries today.

The catalogue, approved by the state council, will take effect on December 1 according to the NDRC’s website. The new catalogue replaces one that came into effect in 2004.

While continuing to encourage foreign investment towards the high-tech, equipment manufacturing and new material industries, the catalogue adds service-outsourcing and modern logistics to the service industry in an effort to fulfill China’s commitment to the WTO.

Overseas investment targeting conventional manufacturing industries in which China has mastered advanced technologies and has competent production capacity is no longer encouraged in the new catalogue.

Under pressure to clean up a growing environmental catastrophe, Beijing is pushing FDI towards developing clean production, reproducible energy, and ecological protection. Foreign capital is not permitted in the exploration of rare and non-reproducible mineral resources, or in high consuming and polluting industries.

Foreigners are also banned from investing in China’s growing golf courses, gambling services and ammunitions manufacturing.

In an attempt to cool soaring house prices, the government is now restricting foreign capital flowing into the development of large-scale property investments and construction and operation of high-end hotels, villas, office towers and exhibition malls. Foreign investment flowing into housing agents, brokerages and the second-tier real estate market also faces new restrictions.

Hoping to further spur development away from the booming coast, the revised catalogue drops the article limiting foreign investment in the central and western regions of China. Introducing foreign capital will also be considered in rejuvenating Northeast China and other historical industrial bases.

In the first nine months of the year, total foreign direct investment totaled US$47.2 billion, an expansion of 10.9 percent from a year earlier.