Overview

On April 1, 2011, the State Council issued, for public consultation, a draft of the Catalogue for Guiding Foreign Investment in Industry (Draft Catalogue). The consultation period expires on April 30, 2011. The Draft Catalogue, upon its formal promulgation, will replace the previous version that took effect in December 2007 (2007 Catalogue).

The Draft Catalogue was prepared with a focus on encouraging foreign investment in high-end manufacturing, high and new technologies, modern services, new energy, energy-saving and environmentally friendly industries.

Similar to the 2007 Catalogue, the Draft Catalogue lists specific industries and economic activities in which foreign investment in China is encouraged, restricted or prohibited. Foreign investment in projects not listed is permitted. Under the current regime governing foreign investment in China, the authority to approve foreign investment in encouraged and permitted projects with a total investment of less than US$300 million has been delegated to local government authorities.

In addition, foreign invested projects that fall into the encouraged category may receive preferential tax treatments.

Baker & McKenzie looks into the key provisions.

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