On November 4th, the National Development and Reform Commission formally consulted on the revised draft of the Foreign Investment Industrial Guidance Catalogue (the “Directoryâ€) and published the full text of the revised Catalogue on its official website.
The focus of this revision is to relax the foreign investment in the service industry and the general manufacturing industry, significantly reduce the restrictions category, and further liberalize the foreign capital ratio limit. The restrictions on foreign shares in the fields of steel, ethylene, oil refining, coal chemical equipment, automotive electronics, and e-commerce were cancelled.
However, the reporter found in the revised version of the "Catalog" that the proportion of vehicle joint ventures in the automotive sector, which has been high since then, has not yet been released. "Automobiles" are still listed in the "Restricted Foreign Investment Industry Catalogue". It is clearly stipulated that “the ratio of Chinese shares is not less than 50%, and the same foreign company can establish two joint ventures (including two) that produce similar products (passenger cars, commercial vehicles, motorcycles). For example, if we merge with other Chinese joint venture partners, we can not be restricted by the two companies.
Starting from 2013, whether the auto industry should let go of foreign stocks has become a hot topic, and in the controversy surrounding this topic, the statement from relevant departments has also been considered as a signal that foreign stocks will break the 50% red line. At the end of 2013, in response to the “Decision on Foreign Investment Access to the General Manufacturing Industry†in the “Decision†of the Third Plenary Session of the 18th Central Committee, Shen Danyang, a spokesperson for the Ministry of Commerce, “further liberalized the general manufacturing industries such as steel, chemicals and automobiles. The restrictions on foreign investment access in the field, including the relaxation of restrictions on foreign capital in terms of registered capital, equity ratio, and business scope, are further elaborated.
In February of this year, when the relevant person in charge of the Ministry of Industry and Information Technology mentioned the issue of the ratio of automobile joint venture shares, he also stated that “the Ministry of Industry and Information Technology said that it is considering the possibility of releasing the automobile joint stock ratio and is formulating specific measures.â€
At the same time, the disputes in the auto industry have not stopped for the 30-year “50:50 joint venture stock limit of Chinese autos should be changedâ€. Now it seems that the attitude of the two ministries and the voice of the auto companies have not changed the attitude of the NDRC in the ratio of auto joint stocks.
However, it is worth noting that in the newly revised Catalogue, the foreign share ratio limit for “new energy vehicle key components†was cancelled. “The manufacture of key components for new energy vehicles†has become a field in the newly revised Catalogue that encourages foreign investment.
The Catalogue clearly states that “the manufacture of key components for new energy vehicles†includes: energy-type power batteries, battery cathode materials, battery separators; battery management systems, motor management systems, electric vehicle electronic control integration; electric vehicle drive motors, vehicles DC/DC, high-power electronic devices; plug-in hybrid electromechanical coupling drive system.
It is understood that in 2004, China has cancelled the restrictions on foreign investment in the field of auto parts. In 2011, the National Development and Reform Commission requested that the proportion of foreign capital (shareholding) of key components of new energy vehicles should not exceed 50%.
For the new energy auto industry, which is currently undergoing rapid development, it remains to be seen what impact this foreign share ratio will have.
The speculations about the “traditional auto parts share policy or change†of the auto parts are not reflected in the newly revised Catalogue. In the sub-catalog of “encouraging foreign investmentâ€, “automobile engine manufacturing and engines are still included. In the field of auto parts such as R&D institution construction, automotive key component manufacturing and key technology research and development, automotive electronics manufacturing and R&D.
After the National Development and Reform Commission issued an anti-monopoly sky-high ticket to 12 Japanese component companies in August this year, whether China will introduce new policies to restrict foreign-funded auto and parts companies from setting up wholly-owned companies in China once triggered speculation.
Another noteworthy content is that the newly revised Catalogue emphasizes encouraging foreign investment in research and development. Obviously, whether it is for the traditional vehicle industry or for new energy vehicles, the promotion of domestic new energy vehicle technology by attracting foreign capital is also the meaning of the revised draft.
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