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China’s decision to ease regulations for foreign enterprises investing in free trade zones (FTZs) aims to improve the “negative list” approach and provide legal protection for reform and opening-up, according to two academics.
The State Council has decided to lift several restrictions or investment limitations for foreign investment in FTZs, a notice said Tuesday.
“The negative list system with its simple model, high level of transparency and simplified procedure has lowered the cost and improved efficiency for foreign companies in China,” said Sun Yuanxin, deputy head of the Institute of Free Trade Zones with Shanghai University of Finance and Economics. A negative list approach identifies sectors and businesses that are off-limits or restricted for investment.
“The negative list system has been proved to be welcomed as the number of new foreign companies and foreign investment climbed,” said Professor Gong Bohua with Law School of Fudan University. Gong said the system helped to establish a fair, transparent, and predictable business environment in FTZs, under the rule of law.
China’s FTZs, which have expanded from the first in Shanghai to the current 11 across the country, are a way of testing new policies, including interest rate liberalization and fewer investment restrictions, to better integrate the economy with international practices.