Comments to MOFCOM and NDRC on Catalogue of Industries for Encouraged Foreign Investment (2019)

2020-04-15 | Beijing, Shanghai

1)It is recommended to set up special chapters in the Encouraged List or draft additional supplements to describe what specific measures the government will give to the encouraged industries in the catalogue and how to implement them;

2) Echoing your recommendation that links to WTO commitment while considering value-added telecommunication services, 50 percent foreign ownership is allowed for those covered within the promised scope when made in 2001. In a positive sense, the government has eased the restriction allowing up to 50% and even 100% foreign ownership for some mentioned services. We would not provide opinions on basic telecom parts, while as for value-added telecom services, we suggest that the government shall further relax the restriction on value-added telecommunication services.

Importantly, there have been updates on the Telecom Catalogue with additional services types enlisted since China’s entry into WTO in 2001. At the time, the commitment was made to relax the restriction on E-Mail, Voice Mail, Online Information and Data Search, Electronic Data Interchange, Value-Added Fax Service, Code & Protocol Translation Services. While with the technology advancement and emerging services, the government also kept up with the regulations by releasing the Revised Telecom Catalogue, for example, adding Internet Resource Collaboration as a subcategory of Internet Data Center, Content Delivery Network, Domestic IP-VPN, Internet Service Provider etc. (If within Shanghai FTZ, there are more services that are open to as much as 50% foreign ownership.) In essence, these revised parts are not considered as WTO concession. Nevertheless, foreign companies would be pleased to see if the government further open up the types of services and have such articulation embodied in the Encouraged Catalogue and Negative List for Foreign Investment accordingly.

3) During the Covid-19 crisis a huge challenge to companies operating in China was that global online resources and technology solutions were blocked in China unless someone had a VPN, and these were heavily restricted as well. Companies needed these tools to collaborate and keep operating. China needs to stop blocking normal business and day to day technology solutions and applications. It has gone beyond a joke now, and the EU, US and other countries need to get together to say, “enough is enough”.

In addition, the European Union Chamber of Commerce hopes that the government can loosen its control over foreign investment in cloud services. Foreign-funded enterprises lack sufficient reliable cloud service providers. But in the meantime there are ample foreign-invested companies which are eager to provide cloud and 5G services, but cannot get relevant permit license.