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China to Adopt Nationwide ‘Negative List’ in 2018

| Oct 21, 2015 09:43 AM EDT

The meeting, which was presided over by Premier Li Keqiang, also decided to set aside an amount for every student enrolled in schools.

Starting in 2018, China will adopt a nationwide "negative list" scheme for investment access in a bid to give more play to the market, as announced by the State Council on Monday.

According to a statement posted on the central government's website, China will kick off a pilot program for the said system by Dec. 1 this year until the end of 2017. It added that the area where the program will be rolled out will be decided later.

Under the "negative list" system, the areas not open for investors will be enumerated. Experts regard this paradigm as an approach that offers greater openness.

The State Council also remarked that the sectors concerning national security will either be fully or partially closed to investment.

Xu Hongcai, director of China Center for International Economic Exchanges' Economic Research Department, lauded this recent move of the Chinese government.

"A clear timetable to adopt the negative list approach shows the government's determination to reform and open up further," Xu said.

The "negative list" management approach has already been adopted for overseas investment in the free trade zones of Shanghai, Tianjin, Fujian and Guangdong Provinces.

Analysts claim that the expansion of the approach will be a significant factor for economic growth.

Shenwan Hongyuan Securities' chief economist Li Huiyong said, "It could increase efficiency and inject vitality into the market."

The approach will also be employed to guide investment from abroad. Currently, the government uses a catalogue to monitor overseas investment.

In an April report from the American Chamber of Commerce in China, it was said that a short negative list will be helpful in trimming down the complexity of business transactions in the country.

China was able to surpass the U.S. as the top recipient of foreign direct investment in 2014--a first in almost a decade.

Xu also noted that "adopting the negative list approach will help draw even more overseas investment into China."

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