Special Administrative Measures for Foreign Investment Access in the Hainan Free Trade Port (Negative List, 2020 Edition)

Policy title: Special Administrative Measures for Foreign Investment Access in the Hainan Free Trade Port (Negative List) (2020 Edition)

Issuing bodies: National Development and Reform Commission; Ministry of Commerce

Announcement date: 31 December 2020

Effective date: 1 February 2021

Policy type: Market Access / Foreign Investment Restrictions

Applies to: Entire Hainan Free Trade Port (whole island)

Description

English explanation of the Hainan Free Trade Port Foreign Investment Negative List (2020 Edition), detailing where foreign investors may invest, which sectors are restricted or prohibited, and how these rules shape market access for global companies entering Hainan.

Summary

The Hainan Free Trade Port Foreign Investment Negative List (2020 Edition) defines all areas where foreign investment is either restricted or prohibited across 11 sectors. All sectors not listed are fully open to foreign investment and follow national treatment.

The list contains 27 items ranging from agriculture, energy and transportation to telecoms, culture, education, and professional services. It establishes the island-wide foreign investment entry framework for enterprises planning to operate in Hainan.

What It Does

The Negative List sets out:

1. Sectors where foreign investors may not invest.

2. Sectors where foreign investment is allowed only under specific conditions (such as equity caps or Chinese control).

3. All sectors not listed are open and treated the same as domestic investment.

4. Government departments must refuse approvals for foreign investments that do not meet the requirements.

This creates a transparent, rule-based market access system for foreign companies entering Hainan.

Who Can Use It

Foreign companies planning operations in Hainan

Joint ventures involving foreign shareholders

Investors evaluating whether their sector is allowed

Professional advisers (legal, tax, investment) preparing investment guidance

Local authorities implementing market access rules

Key Clauses

1. The Negative List applies to the entire island of Hainan and overrides local sector-specific restrictions.

2. Foreign investors may not invest in sectors designated as prohibited.

3. Restricted sectors must comply with stated conditions, such as equity limits or Chinese controlling shareholding.

4. Licensing and enterprise registration authorities must not handle applications that violate the Negative List.

5. Foreign-invested partnerships are not permitted in sectors requiring Chinese control or equity restrictions.

6. Existing international agreements (CEPA, ECFA, treaties) may allow more favourable treatment where applicable.

7. The National Development and Reform Commission and the Ministry of Commerce are responsible for interpretation.

Practical Impact

1. Greater clarity for foreign investors

The list provides explicit transparency: foreign companies can instantly see whether a sector is fully open, restricted, or prohibited.

2. Significant liberalisation compared to the national list

The Hainan list is shorter than China’s national Negative List, reflecting the island’s higher level of openness.

3. Early signs of faster foreign investment growth

According to government data:

2021 actual FDI: USD 3.52 billion (+16.2% YoY)

2022 actual FDI: USD 4.05 billion (+15% YoY)

Jan–Aug 2023: RMB 15.55 billion actual FDI (+10.5% YoY)

4. New foreign-invested education and R&D institutions

Examples include the Bielefeld University of Applied Sciences project (first foreign university to independently run a campus in China).

Lead Department

Hainan Provincial Development and Reform Commission
Division: Foreign Investment and External Cooperation Division

Address: 8th Floor, Provincial Government Building, 9 Guoxing Avenue, Haikou
Email: wzc_fgw@hainan.gov.cn
Telephone: 0898-65338027
Website: https://plan.hainan.gov.cn/

FAQ

How does Hainan ensure the Negative List is effectively implemented?

Hainan has removed outdated or overlapping foreign investment restrictions outside the Negative List, increased transparency, and conducts regular policy promotion through events such as the Boao Forum and the China International Consumer Products Expo. Risk controls are strengthened to support high-level opening.

Will the Negative List be reduced in the future?

Yes. The Hainan Free Trade Port Master Plan calls for progressive reduction of restrictions by 2025 and further liberalisation by 2035, aligned with the island’s transition to high-standard international openness.

Do foreign investors still need to follow national market access rules?

Yes. Sectors not listed in the Hainan FTP Negative List still follow the national Market Access Negative List and other relevant regulations.

Can special exemptions be granted?

After review and approval by the State Council, specific foreign investment projects may be granted exemptions from certain items on the Negative List.

Special Administrative Measures (Negative List) – Full Text

I. Agriculture, Forestry, Animal Husbandry and Fishery

1. Foreign investment in the breeding and seed production of wheat and corn: Chinese shareholding must be no less than 34%.

2. Foreign investment is prohibited in the breeding of China’s rare and unique valuable livestock and poultry varieties, breeding of fine varieties, and the production of related genetic materials (including genetic resources of plants, livestock, and aquatic organisms).

3. Foreign investment is prohibited in the cultivation of Chinese herbal medicines, and in breeding/production of genetically modified breeding crops and aquatic seedlings and genetically modified livestock and poultry.

II. Manufacturing

4. Foreign investment is prohibited in the manufacturing of equipment and facilities for satellite television broadcasting and ground receiving.

III. Electricity, Heat, Gas and Water Production/Supply

5. Nuclear power plant construction and operation must be controlled by the Chinese side.

IV. Wholesale and Retail

6. Foreign investment is prohibited in tobacco leaf processing, and the wholesale/retail of tobacco and tobacco products.

V. Transportation, Warehousing and Postal Services

7. Domestic water transport companies must be controlled by the Chinese side.

8. Domestic shipping agencies must be controlled by the Chinese side. A single foreign investor and its affiliates may not hold more than 25% equity. Legal representatives must be Chinese citizens. Ordinary freight forwarding is not restricted. Foreign investment in road passenger transport companies must be controlled by the Chinese side.

9. Foreign investment is prohibited in the construction and operation of civilian airports. Foreign investors may not build or operate civil airports.

10. Foreign investment is prohibited in postal companies and domestic express delivery services.

VI. Information Transmission, Software, and IT Services

11. Telecommunications: Basic telecom services are limited to joint ventures. Value-added telecom services are limited to joint ventures with Chinese majority control. Foreign telecom operators must comply with the Telecommunications Regulations and the Free Trade Port’s opening requirements.

12. Foreign investment is prohibited in Internet news services, online publishing, online audio-visual services, Internet culture operations (except music), and Internet public opinion information collection and release. Chinese entities must hold controlling stakes in news websites, online media platforms, and in businesses involving editing, publishing, or content security.

VII. Leasing and Business Services

13. Foreign investment is prohibited in legal services (providing legal advice on Chinese law or representing parties in Chinese legal matters). Foreign law firms may not become partners of domestic law firms.

14. Market research must be controlled by the Chinese side. For radio and TV ratings and surveys, the Chinese shareholding must be no less than 67%. Legal representatives must be Chinese citizens.

VIII. Scientific Research and Technical Services

15. Foreign investment is prohibited in human stem cell and genetic diagnosis/treatment technology development and application.

16. Foreign investment is prohibited in social science research institutions.

17. Foreign investment is prohibited in geodetic surveying, marine surveying, aerial photography, ground motion monitoring, administrative boundary surveying, administrative region boundary mapping, topographic mapping, thematic mapping, global positioning networks, and other activities involving mapping. Foreign investment is also prohibited in regional geological mapping, mineral geological surveys, hydrogeology, environmental geology, geodetic surveying, and similar fields. (Mining rights exploration and development are subject to separate national rules.)

IX. Education

18. Pre-school, ordinary primary and secondary education: Foreign entities may not independently run these schools. Public-interest education institutions must be non-profit, and the chair of the board must be a Chinese national residing within China. The number of foreign members on the board of trustees must not exceed one-third.

19. Foreign investment is prohibited in religious education institutions.

X. Healthcare and Social Work

20. Medical institutions must be jointly operated (wholly foreign-owned medical institutions are restricted).

XI. Culture, Sports and Entertainment

21. Foreign investment is prohibited in news organizations (including but not limited to news agencies).

22. Foreign investment is prohibited in the editing, publishing, and production of books, newspapers, periodicals, audio-visual products, and electronic publications.

23. Foreign investment is prohibited in radio stations, TV stations, radio and TV channels, broadcast relay stations, microwave stations, ground receiving facilities, satellite TV broadcasting, cable networks, and related transmission services. Operating movie theaters is permitted only in joint ventures and must be Chinese-controlled.

24. Foreign investment is prohibited in TV program production and operation (including animation).

25. Foreign investment is prohibited in film production companies, distributors, and cinema operators.

26. Foreign investment is prohibited in cultural relic auction companies and cultural relic stores selling Chinese cultural relics.

27. Performing arts troupes must be controlled by the Chinese side.