Implementing the negative list system for market access

The CPC Central Committee and the Chinese State Council place a high priority on introducing the negative list system for market access. In Nov. 2013, the Third Plenum of the 18th CPC Central Committee set forth to ‘implement a uniform negative list system for market access so that market players of all categories can equally access unlisted sectors in accordance with law based on the formulation of the negative list’. The Several Opinions of the State Council on Promoting Fair Market Competition and Maintaining Normal Market Order (No.20 State Council 2014) issued in Jun. 2014 decrees that ‘the market access system will be reformed. The negative list for market access will be drawn up, by which the State Council will outline industries, sectors and businesses of prohibition and restrictions for investment and operation. Market players of all kinds will have equal access to unlisted areas in accordance with law’. Following the deployment of the CPC Central Committee and the State Council, the NDRC and MOFCOM joined related departments in drafting the Opinions on Implementing the Negative List System for Market Access (the Opinions), which, upon adoption by the 16th meeting of the Central Leading Group for Comprehensively Deepening Reform on 15th Sept., was printed and circulated and released by the State Council the other day.

The term ‘negative list’ originated from investment treaty negotiations. At the fifth China-US Strategic & Economic Dialogue in Jul. 2013, the two sides agreed to enter substantive negotiations for the Bilateral Investment Treaty based on pre-establishment national treatment and negative list. The news prompted expert comments that this marked a historic stage in China’s opening up, with significance comparable to China’s WTO accession, and that the adoption of the model did not only agree with the objective evolutionary trends of international investment rules, but also accorded with the keynote of China’s drive to comprehensively deepen reform and build a new open economic system.

The uniform negative list system for market access, set forth at the 3rd Plenum, is a major institutional innovation in that it extends the concept of negative list from negotiation to domestic economic governance. Its basic meaning is that various market players can have equal access to industries, sectors and businesses in a law-abiding manner, as was pointed out by Premier Li Keqiang, ‘Market players may engage in anything that is not prohibited by law.’ The negative list system for market access has three characteristics: first, it shifts the government administrative mode from a positive list to a negative one; second, it makes policies more transparent and predictable; third, it requires a legal basis for regulatory measures on the negative list. The negative list system will slash administrative approval, advance the streamlining of government and delegation of power, and energize the market. It will also promote law-based administration and a government of rule of law.

With the successful introduction and constant improvement of the negative list for market access and the negative list system for foreign investment, various investors, foreign investors included, will enjoy more autonomy and a more level playing field. Better investment environment in China will keep it an attractive destination for domestic and foreign investment.

Source: http://english.mofcom.gov.cn/article/newsrelease/significantnews/201511/20151101157715.shtml

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