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The new Catalogue of Encouraged Industries

Time:2021-01-26 18:30:13Browse:

Author:Diana Parusheva-Lowery Editor:Franco Fornari

The new Catalogue of Encouraged Industries for Foreign Investment(Edition 2020), adopted by NDRC in late 2020, will become effective today (27January 2021).

Thecatalogue aims to encourage foreign investments in particular economic areas (the“national catalogue”) and/or specific geographic regions in China (the“regional catalogue,” which targets economic activities in central, western,and north-eastern China), which are seen as essential for the economicdevelopment of the country. The combined list includes 1,235 items, of which 127are newly included, and 88 were modified. (link) https://www.ndrc.gov.cn/fggz/lywzjw/zcfg/202012/t20201230_1260967.html

Theintention is to incentivise foreign investments in the advanced high-level manufacturingand production-oriented service industries at national level. Thus, the newitems added to the list include, for example, manufacturing of noise andvibration pollution control equipment, manufacturing of artificialintelligence-assisted medical equipment, R&D and manufacturing of passengership navigation and communication system, manufacturing of laser projectionequipment, manufacturing of integrated circuit packaging and test equipment,manufacturing of ultra-high-definition television, manufacturing of auxiliarymedical equipment, etc. (link) https://www.ndrc.gov.cn/fggz/lywzjw/zcfg/202012/W020201230666147156542.pdf

Thelist also includes the production of key new materials like special glass andspecial glass fiber, high-performance fiber, environmental biofilm, etc., andkey components – such as high-pressure vacuum element, special valve, special bearing, wheel speed sensor, etc. Some segments within the environmental andpharmaceuticals sector are also listed as areas for encouragement for foreigninvestments.

In theproduction service industries, some of the new areas where foreign investments willbe encouraged include, for example - maintenance and repair of modern high-endequipment, transformation, and integration of digital production lines. In thefield of information services, the following items have been newly added ormodified - R&D and application of the blockchain technology, 5G technology,and artificial intelligence, online education, online medical care, and onlineworking; modern logistics like bulk commodity export and import centres will beencouraged, etc.

At theregional level, the provinces from the central, western, and northeast regions,which are currently seen as less developed than the coastal provinces, wereallowed to suggest their items. For example, Guangxi Province added medicalequipment and pharmaceutical ingredient production, Henan Province added items likethe production, R&D, and testing of hydraulic pipes, Ningxia AutonomousRegion added items like the development and production of intelligent robotequipment, Hainan, which will become a free trade port added items in thesphere of finance, trade, shipping and so on.

Investingin one of the areas included in the list could lead to certain benefits. Thus,foreign investments in encouraged industries at central and regional level, providedthey are meeting the requirements, could enjoy a preferential corporate incometax of 15%. Besides, the imported self-used equipment for encouraging foreign-investedprojects could be exempt from import taxes. And last but not least, land couldbe referentially suppled and at a special price (usually at 70 percent of the national minimumprice for the transfer of industrial land, but no less than that of the localland). Regional incentives are also implemented and differ from province toprovince.

To find out more about whether or not your investment canbenefit from the incentive provided in the catalogue, please contact Wang Jing& GH Law Firm by sending an email to our Counsel Ms. Diana Lowery (diana@wjngh.cn) and to our International Partner Mr. Franco Fornari (fornari@wjngh.cn).


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