Shanghai to announce off-limits for investors

The first version of the Shanghai free trade zone's "negative list", of sectors that are off-limits to foreign investors in the zone, will soon be released, officials said on Sunday.

The list will cover 18 fields divided into 1,069 sectors, and include 190 special regulatory measures, said Dai Haibo, deputy director of the FTZ's management committee.

"The negative list is a pilot market entry system for foreign investments, and it will be updated every one or two years," Dai said at an afternoon news conference after the free trade zone officially began operating. The list will be published on the Shanghai municipal government's website later, Dai added.

Details of the list had not been made public as of Sunday evening.

The negative list will serve as a blacklist for foreign investors in the FTZ, citing sectors that are off-limits. Investment will be allowed in any sector that is not listed.

Foreign investment in sectors that are off-limits will be managed under current laws, while any sectors not on the list will have the same investment threshold for domestic and foreign investors.

"Foreign investors will only have to inform the authorities, rather than seeking approval as in the past," said Yin Zonghua, director of the department of international economic relations at the Ministry of Commerce, at the news conference. A similar approach will also apply to contract regulations and setting up foreign-funded enterprises, he added.

Liu Yajun, head of the foreign investment department at the Ministry of Commerce, said the move has used international common practice as a reference, and was a preparation for the next step in the reform of the foreign-investment regulatory system.

"This is only our first attempt to make such a list, like schoolchildren doing their homework, so there might be some contradictions or disparities on the list," Dai said.

"But that allows us room for further development, and there will be assessments and adjustments during the implementation process," Dai said, adding that there might also be later versions in 2014 and 2015.

The delay in the list's publication was believed to be because of the difficulties of creating it.

Chen Bo, a professor at the Shanghai University of Finance and Economics and an expert on the FTZ, said the first draft of the negative list might have more than 10,000 restricted areas.

"It would be meaningless to have so many items on the list," he said last week, adding that the list needs to be modified and therefore might be delayed.