New and wide-ranging guidelines which will affect foreign investment become effective on December 1. In the guidelines, issued by the National Development and Reform Commission and the Ministry of Commerce, the central government clarifies which industries are no-go areas for foreign capital and which are encouraged.

China’s emerging golf courses, as seen in our illustration, gaming services and ammunitions manufacturing, for example, are banned.

Authorities will restrict foreign capital flowing into the development of large-scale land lots and the construction and operation of high-end hotels, villas, office towers and exhibition malls.
Authorities will also restrict foreign capital being funneled into housing agents, brokerages and the second-tier real-estate market.

Overseas capital has been blamed by some for soaring housing prices on China’s mainland in recent years.

The National Statistics Bureau states that in the first nine months of this year, developers put RMB2.54 trillion (US$341 billion) into housing projects in China. Of the figure, RMB42.3 billion was from foreign investors, a rise of 60% year on year.

In the first nine months, total foreign direct investment in China expanded 10.9% from a year earlier to US$47.2 billion.

Authorities will also cap the ratio of foreign funds at 50% for a life-insurance company, a third for a securities company and 49% for a funds-management business specializing in stocks.

China will prohibit foreign capital in prospecting and mining its rare and non-renewable mineral resources. It will also embargo foreign-invested projects that are polluters and high users of energy and resources.

In contrast, investment in energy-efficient and ecology-friendly areas will be encouraged.
Source: China Daily