How does the Hainan FTP negative list compare to other FTZ negative lists

The HFTP Has the Shortest Version of the Negative List.

On June 23, 2020, NDRC and MOFCOM jointly issued the new Negative List for Foreign Investments (the “Nationwide Negative List”) and the new Negative List for Foreign Investments in the Pilot Free Trade Zones (the “FTZ Negative List”), both effective on the same day.

The FTZ Negative List has 30 items as compared to the Nationwide Negative List, which contains 33 items.

On December 31, 2020, the NDRC and MOFCOM published the Negative List for Foreign Investments in Hainan Free Trade Port (the “HFTP Negative List”), which consists of merely 27 items restricting foreign investments in relevant sectors.

Below is a summary of the key differences.

Industries Hainan Free Trade Port Free Trade Zone
MiningNo restriction.Foreign investor prohibited in rare earth, radioactive minerals, tungsten exploration, mining and ore dressing
AutomotiveNo restriction.Foreign shareholding in car manufacturing not to exceed 50%. Same foreign company may establish up to two joint ventures (JVs) in the same category of car manufacturing.
TelecomUnlimited foreign shareholding in online data processing and trade processing.
HFTP-registered enterprises may offer internet data center (IDC) and content distribution network services to HFTP and rest of the world
Foreign shareholding in value-added telecom services not to exceed 50%.
EducationWFOE allowed for overseas highlevel universities, professional institutions and non-degree vocational schools in STEM, agricultural and medical fieldsJV required (with Chinese partner dominant) for Pre-K, high schools and higher education.
Social investigation / researchForeign shareholding up to 33%.Not allowed.

What this means is that foreign investors in the mining, automotive, telecom, education and social research services industries will be able to conduct and set up businesses that are not permitted anywhere else in China.

Except for specific regulations related to the mining industry, foreign investors will generally be able to register and obtain their business licenses in Hainan in these industries and further expand into other locations in China.


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