Region/Countries: Asia, China Industry: Agriculture / Timber, Multiple Sectors Date: July 2016

Why this is important to Wisconsin businesses: The regulatory changes are intended to promote industry advancement.

The Chinese State Council recently moved to ease investment rules in four free trade zones (FTZs) in Shanghai, Guangdong, Tianjin and Fujian. The temporary adjustment of regulations for administrative approvals was passed, and a total of 18 rules and regulations for 51 items have been revised. Among them, more than 20 items involve changes from administrative approval to managerial registration for foreign investment in the above four FTZs. In addition, China will further open up a number of industry areas, temporarily allowing foreign investors to fund wholly owned enterprises in the fields including iron and steel production, gas station operations, shipping and automotive batteries.

Wholly foreign-owned enterprises have also been approved in dozens of areas outside of the negative list on foreign investment, covering sectors ranging from agriculture to transportation.

Conditions and restrictions in the for foreign investors in FTZs have also been relaxed in the grain and oil business under new regulations, and also allow for wholly foreign-owned enterprises engaging in the wholesale business of salt in the FTZs.

Wholly foreign-owned enterprises are allowed to engage in processing of soybean oil, rapeseed oil, peanut oil, cottonseed oil, tea seed oil, sunflower oil, palm oil and other edible oil in FTZs. The government temporarily suspended the restrictions on foreign investors in processing of rice, flour, raw sugar and deep processing of corn in the above FTZs.

Furthermore, China will temporarily suspend the restrictions on foreign businesses engaging in grain purchasing, wholesaling of grain and cotton, and the construction and operation of the large-scale wholesale market for agricultural products in the Shanghai, Guangdong, Tianjin Fujian FTZs.

Another big step in opening up is in the iron and steel industry, where foreign investors will be allowed to set up wholly foreign-owned iron and steel production enterprises in the FTZs. The Chinese market has shown strong demand for special steel products.

Experts pointed out that the purpose of greater involvement of foreign investors is to promote China’s development in technology, industrial transformation and other advancements. Therefore, the trend of foreign investment in the FTZs in the future will focus on high-end fields.