China Council for the Promotion of International Trade (ccpit) 2009 Preface

Trade and Investment

1. Measures for Overseas Investment Management

Ministry of Commerce of China decided to implement Measures for Overseas Investment Management from May 1^st 2009. Compared with the former regulations, these Measures only kept approval rights of Ministry of Commerce for a few key overseas investments. Meanwhile, the approval process is greatly simplified. The term “overseas investment” as mentioned in these Measures means that an enterprise legally established in China (hereinafter referred to as the “enterprise”) sets up a new non-financial enterprise overseas or acquires the right to own, control or manage an existing non-financial enterprise overseas in the way of merger or acquisition.

With this approach, enterprises to develop foreign investment in the following circumstances shall report to the Ministry of Commerce for approval: overseas investments in countries with no diplomatic relations with China; overseas investment in specific countries or regions; Chinese foreign investment of US$ 100 million dollars and above; overseas investment involving the interests of multi-country (regions); investment to establish overseas companies for special purposes.

At the same time, overseas investment as follows shall be reported to the provincial commerce department for approval: overseas investment by local enterprises to develop the Chinese investment from US$ 10 million dollars to US$ 100 million dollars; overseas investment in energy, mineral resources; investment required for domestic investors.

The measures stipulated that the Ministry of Commerce to retain only a small number of major overseas investment approval authority. According to the cases number of approval in the previous year, 85% of overseas investment approval is estimated to be transferred to provincial competent commerce departments.

Meanwhile, the Measures by the Ministry of Commerce simplify the approval procedures. Most of foreign-invested enterprises only need to submit an application form and obtain an Approval Certificate of the People's Republic of China to Invest Abroad in 3 working days.

2. Foreign Investment Industrial Guidance Catalogue

The Ministry of Commerce promulgated Foreign Investment Industrial Guidance Catalogue on December 1st 2007, indicating clearly the catalogue of industries in which foreign investment is encouraged. The main catalogue of foreign investment to light industry is as follows:

Figure 10 161 Catalogue of industries in which foreign investment is encouraged, restricted and prohibited

Catalogue of light industries in which foreign investment is encouraged
Industry name	Content
Agricultural And sideline food processing industry	1.Development and production of biology feeds, straw feeds, and aquatic product feeds 2. Aquatic products processing, seashell products cleansing and processing, and development of function food made from seaweed 3. Storage and processing of vegetables, dry and fresh fruits, fowl and livestock products
Food manufacturing industry	1. Development and production of food for babies and agedness, as well as function food 2.Development, production and processing of forest food 3.Natural food additives, food ingredients production (equity joint ventures or contractual joint ventures only)
Beverage manufacturing industry	1. Development and production of drinks of fruits, vegetables, albumen, teas, coffees and botanical drinks
Leather, fur, feather/down, and their product industry	1.Cleansing technology processing of leather and fur 2. Post ornament and processing of bather with new technology 3.Processing of high-grade leather(leather for sofa and automobile cushion)
Lumber Processing Industry and Bamboo, Vine, Palm, Grass Products Industry	1. Development and production of new technology and products for the comprehensive utilization of three remains "sub-quality, small wood and fuel wood" and bamboo in the forest industry
Paper Making and Paper Products Industry	1.Project based on the mode of integration of forest and paper with an annual production capacity of over 300 thousand tons of chemical wood pulp on single production line or an annual production capacity of over 100 thousand tons of chemical mechanical wood pulp on single production line, and production of high-quality paper and cardboard under synchronized construction (equity joint ventures or contractual joint ventures only)
Plastic products industry	1. Development and production of new products and new technologies for agricultural films (photolysis film, multifunctional film and the raw materials, etc.) 2. Reutilization and counteraction of waste and old plastics 3. Development and production of plastic flexible packaging technology and new products (high barrier, multi-functional film and materials)
Catalogue of light industries in which foreign investment is restricted
Agricultural And sideline food processing industry	1.Soybean and rapeseed edible oils and fats processing(Chinese partner shall hold the majority of shares), deep processing of corn 2.Production of bio-liquid fuel (fuel ethanol, bio-diesel) (Chinese partner shall hold the majority of shares)
Beverage manufacturing industry	1. Production of millet wine and spirits of famous brands (Chinese partner shall hold the majority of shares) 2. Production of soda beverage
Printing and Record Medium Reproduction Industry	1. Printing of publications (Chinese partner shall hold the majority of shares except printing of package decoration)
Rubber product industry	1. Old tire recondition (not including radial tire), and production of industrial rubber fittings of low-performance
Catalogue of light industries in which foreign investment is prohibited
Beverage manufacturing industry	1. Processing of green lea and special tea with China's traditional crafts (famous tea, dark tea, etc.)
Commercial product and other manufacturing industries	1. Ivory carving 2. Tiger-bone processing 3. Production of bodiless lacquerware 4. Production of enamel products 5.Production of Xuan-paper (rice paper) and ingot-shaped tablets of Chinese ink

Source: National Development and Reform Committee and the Ministry of Commerce

3. Guiding Catalogue for the Adjustment of Industrial Structure

The National Development and Reform Commission issued the Guiding Catalogue for the Adjustment of Industrial Structure in 2008, to point out the direction for light industry investors. The Catalogue shows clear the specific items in which investment is encouraged, restricted and prohibited as follows:

Figure 10 7 Light industry projects in which investment is encouraged

No.	Contents
1	Projects of chemical wood pulp with an annual output capacity of 300,000 tons, chemical mechanical wood pulp with an annual output capacity of 100,000 tons, chemical bamboo pulp with an annual output capacity of 100,000 tons, cultural paper with an annual output capacity of 300,000 tons, paper board with an annual output capacity of 300,000 tons.
2	Development and manufacturing of complete sets of pulp and paper making machines with high and new technology
3	Non-metal products mold design, processing and manufacturing
4	Development of bio-degradable plastics and its product series
5	Development and manufacturing of plastic water conservation equipment and multilayer films for farming
6	High technology ceramics (including industrial ceramics) and equipment technology development
7	Development and application of ceramics cleansing production technology
8	Development and manufacturing of sewing machines of integration of light, machinery and electricity.
9	New technology R & D and product manufacturing of natural perfume and synthetic perfume
10	R & D and manufacturing of new and ecotype (easy for degradation, recycle and reuse) packaging material
11	Development and manufacturing of new plastic products such as new plastic heated boards, heavy caliber plastic pipes (diameter bigger than 0.5m and more), ultra-low noise drain plastic pipes, anti-seepage geomembrane, medical plastics
12	Development and application of high-new, digital printing technology and high definition plate making system
13	Paint film craft of environment-friendly peritoneum
14	Special procurement products manufacturing of ethnic minorities
15	Development and application of natural food additives materials and production technology
16	Development and application of ECF and TCF chemical pulp bleaching craft
17	Manufacturing of high-tech green stored energy battery (mercury-free alkaline manganese battery, ni-mh battery, lithium ion battery, fuel battery, zinc-air battery, solar battery)
18	lithium primary battery
19	Cleansing production of pig, cow and sheep skin and new technology processing of finishing leather ornaments
20	R & D and production of water-based and eco-type after finishing material technology of synthetic leather, artificial leather, synthetic leather
21	R & D, production and application of The use of high-tech fermentation products (excluding maize) with biological technology and using biomass as raw materials
22	Multipurpose use of byproducts in agricultural products processing
23	Development and production and raw material base construction of juice and vegetable juice
24	Development and production of botanical drinks and botanical protein drinks
25	Development of light weight hollow glassware products and production technology and equipment

Source: National Development and Reform Commission

Figure 10 8 Light industry projects in which investment is restricted

No.	Content
1	Refrigerator, freezer and fridge-freezer projects which cannot meet Standard for Refrigerator on Energy Savings and Environment Protection
2	Washing machine project which can't meet Standard for Electric Washing Machine on Energy Savings and Environment Protection
3	Air-conditioner projects which cannot meet Standard for Air-conditioners on Energy Savings and Environment Protection
4	Low end paper and paper board production projects
5	Ordinary PVC artificial leather production line
6	Tanning project with annual output capacity below 100,000 pieces (accounted by standard cow skin piece)
7	Single-spiral incandescent filament production line at a production speed lower than 1500/hour
8	Series production line of common medium-speed industrial sewing machine
9	Production line of common medium-speed industrial over-lock sewing machine
10	Electronic price computing scale (accuracy lower than 1/3000 of the largest weighing, weighing ≤15kg)
11	Electronic truck scale project (accuracy lower than 1/3000 of the largest weighing, weighing ≤300 tons)
12	Electronic railroad track scale projects(accuracy lower than 1/3000 of the largest weighing, weighing ≤150 tons)
13	Electronic dynamic weighbridge project (accuracy lower than 1/500 of the largest weighing, weighing ≤150 ton)
14	Electronic belt scale (accuracy lower than 5/1000 of the largest weighing)
15	Electric hanging scale projects (accuracy lower than 1/1000 of the largest weighing, weighing ≤50 ton)
16	Spring dial scale projects (accuracy lower than 1/400 of the largest weighing, weighing ≤8kg)
17	Two aluminum pieces can project
18	Common bile vacuum flask glass production line
19	Glass container production line with an annual capacity lower than 20,000 tons
20	Synthetic fatty alcohol projects (synthol and Ziegler alcohols with oxo alcohols, non-oil hydrogenation alcohol)
21	Trimeric sodium phosphate production line with annual output capacity of 50,000 tons
22	Paste-type zinc-manganese battery project
23	Nickel-cadmium cell battery projects
24	Open-type lead-acid batteries projects
25	Toothpaste projects with an annual output capacity below 5,000 tons
26	Sugar production projects
27	North sea salt project with an annual output below 1 million annually, new South sea salt project; mine (well) salt project with output capacity below 600,000 tons annually; lake salt project with output capacity below 200,000 tons annually
28	Chinese spirit production line
29	Alcohol production line (exclude fuel ethanol projects)
30	Monosodium glutamate production line with traditional technology and craft
31	Saccharin and other chemical synthetic sweeteners production line
32	Pulp production with chemicals like elemental chlorine or generating elemental chlorine as bleaching agents
33	Cast polypropylene (cpp) film production projects
34	Film for farming production projects
35	Common lead-acid battery production projects with an annual output capacity below 200,000 KVAh (exclude new structures of dragnet, winding type, bipolar and colloid), cadmium plate type and open-type
36	Common electric incandescent lamp products
37	Pulp and paper board production projects not qualified to economic scale

Source: National Development and Reform Commission

Figure 10 9 Light industry projects in which investment is prohibited

No.	Content
1	Process units of vacuum salt making, lake salt and North sea salt with annual output of 50,000 tons and below
2	Salt production units applying mine bittern water, and oil, gas and fields water and applying pan and sun-drying methods
3	South sea salt production unit with annual output capacity of 10,000 tons
4	Leather production units to process less than 30,000 pieces of leather (accounted by standard cow piece)
5	Ink production units with an annual output capacity below 300 tons (exclude those applying high technology and pollution-free units)
6	Sodas production line with a capacity below 100 bottles/minute (bottle capacity of 250ml below )
7	Chemical wood pulp production line with an annual output capacity of 510,000 tons annually
8	Straw pulp production unit with annual output capacity of 340,000 tons and pulp making production and equipment such as spherical digester, low level paper making machine with narrow width, low speed and high consumption.
9	Manufacturing technique of polyurethane foam products with CFCs as blowing agent, polyethylene and polystyrene extruded foam plastics (eliminated in accordance with the general requirements of International Convention that China abides by)
10	Production line of refrigerator, freezer, automotive air conditioner, industrial and commercial refrigeration equipment with CFCs as blowing agents
11	Production technique with CTC as cleaning agent
12	Production technique with CTC-113 as cleaning agent
13	Production technique with TCA as cleaning agent
14	Bike salt welding furnace
15	Soldering craft in lithographed sheet canning industry
16	Techniques of match stick rowing and dismantling
17	Match stick machine, rowing machine and dismantling machine
18	Impact nail making machine
19	Crack metal wire loom
20	Alcohol production craft and equipment with an annual output of 30,000 tons (exclude alcohol made by waste molasses)
21	Monosodium glutamate production technique and equipment with an annual output capacity below 30,000 tons
22	Citric acid production technique and equipment which cannot meet environment protection standards
23	Paper products production line made from waster paper with an annual output capacity below 10,000 tons which cannot meet environment protection standards
24	Retail plastic shopping bags thinner than 0.025 mm

Source: National Development and Reform Commission

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