New Adjustments on the Catalogue of Investment Projects Approved by the Chinese Government
On October 31, 2014, the State Council issued the Circular on promulgating the Catalogue of Investment Projects Approved by the Government (2014 Version) (the “New Catalogue”), which took effect on the same day. The New Catalogue has superseded the Catalogue promulgated on December 2, 2013 (the “Old Catalogue”).
Compared to the Old Catalogue, several changes to the systems of approvals and filing of investment projects have been made in order to simplify the approval and facilitate the investment implementation. According to the statistical data issued by the National Development and Reform Commission (“NDRC”), the investment approval by Chinese authorities in 38 fields has been eliminated or delegated from state level to provincial or local level in total. Combined with the Old Catalogue, the total amount of fields subject to the approval of state level has been reduced by 76% since 2013.
The details of the main changes are highlighted as follows:
1. Elimination of Administrative Approval on Certain Fields
According to the New Catalogue, the government approval of investment in 15 fields is eliminated from the catalogue, including steel, non-ferrous metals, fertilizers, cement, shipping, urban water supply and other urban construction projects. Instead, only filing for record is required for the investment in those fields.
2. Delegation of Administrative Approval Power to Lower Level on Certain Fields
Approval authorities for the investment in several fields have been delegated from the state level to the provincial or local level, including fields of heat power stations, pumped-storage power stations, new general airport projects, the expansion projects of combined military and civilian airports, the exploration of iron mining, new ethylene projects, etc.
Besides the main changes mentioned above, the New Catalogue also adjusted the approval and filing requirements on cross-border investments, as described in the following tables:
a. Foreign Investment
|Competent Government||Approval/Filing||Old Catalogue||New Catalogue|
|State Council||Filing||Total investment amount of USD 2 billion or more (including capital increase).|
|The Investment Departments of State Council (generally NDRC)||Approval||Encouraged category: total investment amount of USD 300 million or more (controlled by a Chinese party).
Restrictive category: total investment amount of USD 50 million or more (excluding real estate).
|Encouraged category: total investment amount of USD 1 billion or more (controlled by a Chinese party).
Restrictive category: total investment amount of USD 100 million or more (excluding real estate).
|Provincial Government||Approval||Restrictive category: total investment amount of less than 50 million or real estate projects.||Restrictive category: total investment amount of less than 100 million or real estate projects.|
|Local Government||Approval||Encouraged category: total investment amount of less than USD 300 million (controlled by a Chinese party including relative controlling).||Encouraged category: total investment amount of less than USD 1 billion (controlled by a Chinese party including relative controlling|
b. Outbound Investment
|Outbound Investment Projects||Old Catalogue||New Catalogue|
|Projects with the investment amount of USD 1 billion or more than USD 1 billion from Chinese investors.||Approved by The Investment Departments of State Council (generally NDRC)||The provision is eliminated.|
|Investments of domestic enterprises to establish enterprises outbound (excluding financial companies).||Approved by the Ministry of Commerce (“MOFCOM”) once involving sensitive countries and regions or sensitive industries; under other circumstances, enterprises under administration of the central government shall file record with MOFCOM, local enterprises shall file record with provincial-level governments.||The provision is eliminated.|
The New Catalogue indicates that the Chinese government continues to deepen the reform of the investment system and the administrative examination and approval system in order to streamline administration and delegating powers to lower the requirements effectively transform the government’s investment administration functions, and eventually facilitate the execution of investments in and out of China by independent investors. As a result, the Chinese market is likely to further integrate into the global economy.
However, there are still certain issues to be further clarified. Regarding the cross-border investments, relevant rules in the New Catalogue are not clearly consistent with the corresponding rules in other current regulations, such as the Administrative Measures for Approval and Filing of Foreign Investment Projects issued by NDRC on April 8 2014 and the Administrative Measures for Examination and Approval of Outbound Investment Projects issued by MOFCOM on September 2014. Therefore, different rules in different regulations issued by different authorities are expected to be adjusted or modified in order to provide a unified regulatory framework for the implementation of the cross-border investments.