June 30, 2019 / 3:04 AM / 3 months ago

China eases foreign investment curbs amid cooling trade tensions

BEIJING (Reuters) - China’s state planning agency on Sunday said it has cut the number of sectors subject to foreign investment restrictions, as Beijing moved to fulfil its promise to open major industries.

FILE PHOTO: Employees are seen working on a production line of a factory manufacturing composite material products in Nantong, Jiangsu province, China May 24, 2019. Picture taken May 24, 2019. REUTERS/Stringer

The loosening in curbs, though widely anticipated, comes after the United States and China agreed on the weekend to restart trade talks with U.S. President Donald Trump offering concessions on tariffs and an easing of restrictions on tech company Huawei.

The National Development and Reform Commission (NDRC) said it has eased foreign investment curbs on sectors including petroleum and gas exploration and widened access to agriculture, mining and manufacturing.

NDRC published on its website the new, shorter so-called negative list that sets out industries where foreign investment is limited or prohibited.

The number of sectors and subsectors on the negative list was cut to 40 from 48 in the previous version, which was published in June last year. The new list takes effect on July 30.

The NDRC document said domestic shipping agencies, gas and heat pipelines in cities with more than 500,000 people, cinemas and performance agencies no longer needed to be controlled by Chinese entities. It also widened access to petroleum and gas exploration, agriculture and some metals resources exploration.

China has repeatedly promised to further open its markets to foreign investment, but has stressed such decisions would be based on the economy’s own needs and not due to external pressure.

It shortened the negative list last year, easing curbs on sectors including banking, the automotive and heavy industries, while also allowing 100% foreign ownership in some industries where ownership caps previously applied.

Foreign investment in China was previously assessed on a case-by-case basis with approval granted by the local branch of the commerce ministry. Under the negative list system, only investments in industries specified in the list are prohibited or subject to review.

Despite the reforms of recent years, foreign businesses say progress has been slow with foreign investment in many industries still restricted while fresh promises of greater access do little more that repeat earlier pledges.

Reporting by Yilei Sun and Norihiko Shirouzu; Writing by Yawen Chen in Beijing; Editing by Sam Holmes

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