{"id":8670,"date":"2021-10-10T08:00:10","date_gmt":"2021-10-10T08:00:10","guid":{"rendered":"https:\/\/focus.cbbc.org\/?p=8670"},"modified":"2025-04-23T09:50:17","modified_gmt":"2025-04-23T09:50:17","slug":"what-new-restrictions-in-hainan-tell-us-about-investment-in-services-in-china","status":"publish","type":"post","link":"https:\/\/focus.cbbc.org\/what-new-restrictions-in-hainan-tell-us-about-investment-in-services-in-china\/","title":{"rendered":"What new restrictions in Hainan tell us about investment in services in China"},"content":{"rendered":"

Hainan has become the first province to publish a Negative List for Cross-Border Trade in Services. While the list is far longer than the nationwide list for foreign investment, it is much more detailed and provides a useful template for further reform, writes Torsten Weller<\/span><\/h2>\n

While China\u2019s regulatory crackdown and the focus on \u2018Common Prosperity\u2019 dominated this summer\u2019s headlines, a smaller but nonetheless significant development took place on the island province of Hainan<\/a>. On 26 August 2021, China\u2019s first negative list for trade in services took effect for the Hainan Free Trade Port<\/a> (FTP), a new free trade zone that aims to stimulate trade in new services such as tourism, e-commerce and logistics. A negative list governs industry sectors in which foreign investment is prohibited or where possible restrictions may apply.<\/span><\/p>\n

Overall, Hainan\u2019s Negative List for Services seems surprisingly long, including 70 items; 31 of which are outright bans. Yet the detailed information on restricted cross-border services also presents a first attempt at offering a clear picture of existing non-trade barriers, which previous negative lists often left out. As such, the list constitutes an important benchmark for further reform and liberalisation.<\/span><\/p>\n

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Background <\/span><\/h4>\n

China has long had negative lists for trade in goods and foreign investment in China. After being tested in several provinces since 2016, the first nationwide negative list was published in 2018. Prior to this, foreign investment and ownership was only permitted in so-called \u2018encouraged\u2019 sectors and industries. Beyond this, there was either an outright ban or considerable administrative hurdles. <\/span><\/p>\n

Negative lists reversed that system, stating that in any sector not figuring on the list, foreign investment and full-ownership was \u2013 in principle \u2013 allowed. The new Foreign Investment Law of 2020 further institutionalised the idea that foreign businesses should be treated in the same way as domestic Chinese firms unless they are operating in restricted sectors or are prohibited outright from investing. By 2020, there were 12 restricted and 21 prohibited sectors remaining.<\/span><\/p>\n