Open markets to attract foreign companies

China plans to introduce a new shortened negative list on market access and remove more barriers to entry into new markets to pave the way for greater participation of enterprises and create a more favorable market for domestic and foreign players, officials and experts said.

The move follows China’s issuance in late August of guidelines aimed at improving its market access regime, which are intended to show how the world’s second-largest economy is implementing reforms outlined in a resolution adopted during the third plenary session of the 20th Central Committee of the Communist Party of China in July.

Experts said China’s ongoing efforts to improve its market access system and remove barriers demonstrate the country’s determination to promote better integration of efficient markets and competent government. Such an approach is expected to further stimulate market vitality, generate new high-quality productive forces and promote long-term growth.

The essence of market access lies in its role as the gateway through which economic participants enter the economic arena, and the market access system is the focal point in the relationship between the government and the market, said Luo Wen, head of the State Administration for Market Regulation.

Luo said that only by establishing an open, transparent, regulated, fair and well-supervised market access system can the government effectively strengthen market supervision, thereby unleashing the full potential of the market in terms of resource allocation.

This will enable the government to better fulfill its role by providing autonomy to economic entities, stimulating market dynamism and fostering a business environment that embodies the principles of market orientation, legal order and international standards, Luo added.

Li Chunlin, deputy head of the National Development and Reform Commission, said the commission is working with relevant departments to speed up the revision of the negative market access list.

In China, a unified negative list for market access was published for the first time in 2018; industries not included in the negative list are open to all types of entities to participate on an equal basis.

Since its inception, this negative list has undergone a process of continuous refinement, losing its regulatory weight with each successive edition. Over the years, the number of items on the list has been reduced from 151 to 117.

Moreover, in recent years, the NDRC, in cooperation with relevant departments, has removed more than 20 unauthorized negative market access lists created by local authorities, thereby correcting practices that violate applicable regulations.

Li said easing entry restrictions in areas such as senior care and healthcare should allow various entities to engage more actively in economic activities, spurring innovation and efficiency in these sectors.

Despite efforts to strengthen market access regulations, unreasonable restrictions and hidden barriers still persist and hinder progress in the Chinese business environment.

Wang Chenwei, director of the Macroeconomic Research Office at the Institute of Economic System and Management under the NDRC, said some sectors still struggle with an incomplete institutional framework, and problems of regional protectionism and market segmentation persist in some areas, making it difficult to build a unified national market and promote fair competition.

Wang said that with the development of a new wave of technological revolution and industrial transformation characterized by rapid progress in the field of breakthrough technologies, concerns have been raised about the lack of clarity in regulations regarding the entry of new sectors and formats into the market.

The pace of innovation and the dynamic nature of these industries have highlighted issues such as overly stringent regulations on market entry management, underscoring the need to improve relevant market entry systems and better facilitate the development of new sectors and formats, Wang added.

The guidelines indicate that the new formats are deep-sea exploration, aeronautics, aviation, life and health sciences, new energy sources, artificial intelligence, trusted computing, information security, intelligent rail transport and the modern seed industry.

While the current guidelines have defined 10 specific emerging sectors and fields, this is a dynamic and evolving process. Going forward, this list is poised to continually expand and adapt in line with the rapid pace of technological development, experts said.

Guo Liyan, deputy director of the Economic Research Institute of the Chinese Academy of Macroeconomic Research, said China is preparing to revolutionize the approach to managing market entry in these emerging sectors, emphasizing a shift from traditional models focused on administrative approvals to a more market-oriented paradigm.

Guo said the focus will be on gradually easing or even lifting entry restrictions for new formats and fields that do not pose a threat to national security or social stability.

Given the inherent uncertainty of some emerging sectors, it is not always feasible to establish comprehensive standards similar to those in mature industries. This flexible approach aims to create room for experimentation and innovation, cultivating a favorable environment for the development of new technologies and industries, Guo added.

Guo added that a more flexible and user-friendly market access system will play a key role in accelerating the transformation of technological advances into market-ready solutions, ultimately helping to boost the growth of the high-tech industry and strengthen China’s position as a global innovator.

When problems arise in the development of these sectors, changes to market entry standards are needed to spur progress, eliminate outdated practices and ensure the market functions properly, said Liu Xiangdong, deputy head of the Economic Research Department at the China Center for International Economic Exchanges.

Liu noted that regions across the country are racing to capitalize on the growing low-mountain economy, adding that concerns abound about safety, industry standards and the regulatory framework for entering the nascent sector.

The rapid development of the low-level economy has highlighted the urgent need to quickly improve market access regulations in response to operational realities, with a view to avoiding potential chaos such as unregulated aviation activities, Liu added.

The Guidelines also recommend a coordinated approach whereby changes in access to foreign investment are reflected in domestic investment rules and vice versa, without prejudice to the opportunities available to existing businesses.

If restrictions on access to foreign investment are lifted, parallel measures will be implemented to open up avenues for domestic investors. Similarly, where entry thresholds are set for domestic investors, foreign investors will be subject to comparable standards, ensuring equal treatment across the board, in line with the guidelines.

The guidelines not only promote a level playing field by ensuring fair treatment for all entities, but also allow foreign investors to benefit from greater transparency and predictability of regulations, said Bai Ming, a researcher at the China Academy of Foreign Trade and Economic Cooperation.

This development will pave the way for the faster establishment of an open economic framework and is poised to attract greater foreign capital inflows into the country, enabling international enterprises to participate in and benefit from China’s ongoing development opportunities, Bai added.

[email protected]