Foreign Investment Guidance Catalog - Restrictions on Foreign Investment

Your email:  
subscribe unsubscribe  

The Foreign Investment Guidance Catalog defines the categories of the proposed investment (Encouraged, Restricted, or Prohibited – any activity not listed therein is classified as “Permitted”). The new Foreign Investment Industries Guidance Catalogue came into effect on January 1, 2005 (see below). It further opens up the Chinese economy to foreign investment in line with China’s WTO commitments. Some industries that are no longer in the Restricted or Prohibited categories include broadcasting and television production, leasing of goods, courier services, goods inspection and transport agency services. Nevertheless, some industries have been removed from the Encouraged Category due to economic overheating. Please note that this is not a completely exhaustive list of restrictions – industry-specifics regulations add additional restrictions in a few instances. Following is the full text:

Foreign Investment Guidance Catalog

Encouraged Category

I. Farming, Forestry, Animal Husbandry and Fishery Industries

1. Improvement of low and medium yield fields.

2. Planting technology, without social effects of pollution, for vegetables (including edible fungus and melon/watermelon), fruits, teas and serial development and production of these products.

3. Development and production of new breed varieties (excluding genetically modified varieties) of fine quality, high-yield crops such as sugar-yielding crops, fruit trees, flowers and plants, forage grass, and related new techniques.

4. Production of flowers and plants, and construction and operation of nursery base.

5. Reusing in fields and comprehensive utilization of straws and stalks of crop, development and production of resources of organic fertilizers.

6. Cultivation of traditional Chinese medicines (equity joint ventures or cooperative joint ventures only).

7. Planting of forest trees (including bamboo) and cultivation of fine strains of forest trees.

8. Planting of caoutchucs, sisals and coffees.

9. Breeding of quality varieties of breeder animals, breeder birds and aquatic offspring (excluding precious quality varieties peculiar to China).

10. Breeding of famous, special and fine aquatic products, as well as cage culture in deep water.

11. Construction and operation of ecological environmental protection projects preventing and treating desertification and soil erosion such as planting trees and grasses, etc.

II. Mining and Quarrying Industries

1. Venture prospecting and exploitation of petroleum and natural gas.

2. Exploitation of oil and gas deposits (fields) with low osmosis.

3. Development and application of new technologies that can increase the recovery factor of crude oil.

4. Development and application of new technologies for prospecting and exploitation of petroleum, such as geophysical prospecting, well drilling, well-logging and downhole operation, etc.

5. Prospecting and exploitation of coal and associated resources.

6. Prospecting and exploitation of coal-bed gas.

7. Exploration and benefiction of gold mines with low quality or difficult to beneficiate (equity joint ventures or contractual joint ventures only).

8. Prospecting, exploitation, and beneficiation of iron ores and manganese ores.

9. Prospecting and exploitation of copper ores, plumbum ores and zinc ores (equity joint ventures or cooperative joint ventures only; wholly foreign-owned enterprises are permitted in western regions).

10. Prospecting and mining of aluminum ores (equity joint ventures or cooperative joint ventures only; wholly foreign-owned enterprises are permitted in western regions).

11. Mining and benficiation of chemical mines including sulfur ores, phosphate ores, kalium ores, etc.

III. Manufacturing Industries

1. Food Processing Industry: (1) storage and processing of food, vegetables, fruits, fowl, and livestock products (2) aquatic products processing, seashell products cleansing and processing, and development of function food made from seaweed (3) development and production of drinks of fruits, vegetables, albumen, teas and coffees, (4) development and production o fond for babies and agedness, as well as function food, (5) production of dairy products, (6) development and production of biology feeds and albumen feeds.

2. Tobacco Processing Industry: (1) production of secondary cellulose acetate and processing of tows, (2) production of tobacco slices in the way of paper manufacturing.

3. Textile Industry: (1) production of special textiles for engineering use, (2) weaving and dying as well as post dressing of high-grade loomage face fabric.

4. Leather and Coat Products Industry: (1) processing of wet blue skin of pig, cow and sheep with new technology (2) post ornament and processing of bather with new technology.

5. Lumber Processing Industry and Bamboo, Bine, Palm, and Grass Products Industry: (1) development and production of new technology and products for the comprehensive utililization of “sub-quality, small wood and fuel wood” and bamboo in the forest area.

6. Papermaking and Paper Products Industry: (1) project based on the mode of integration of forest and paper with an annual production capacity of over 300,000 tons of chemical wood pulp or an annual production capacity of over 100,000 tons of chemical mechanical wood pulp (equity joint ventures or contractual joint ventures only), (2) production of high-quality paper and cardboard (equity joint ventures or contractual joint ventures only).

7. Petroleum Refining and Coking Industry: (1) deep processing of needle coke and coal tar (2) production of heavy traffic road asphalt.

8. Chemical Raw Material and Products Manufacturing Industry: (1) production of alkene through catalyzing and cracking of heavy oil (2) production of ethylene with an annual production capacity of 600,000 tons or over (Chinese partners must hold a relative majority of shares), (3) comprehensive utilization of ethylene side-products such as C5-C9, (4) mass production of corvic (in the way of ethylene, (5) production of organochlorine serial chemical industrial products (excluding high-residual organochlorine products, (6) production of basic organic chemical industrial raw materials such as the of benzene, methylbenzene, dimethylobenzene, etc. and its derivatives, (7) production of supporting raw materials for synthesized materials (bisphenol-A, (40’ diphenylmethane, diiso-cyan ester, and vulcabond toluene), (8) production of synthetic fiber raw materials: precision terephthalic acid, vinyl cyanide, caprolactam and nylon 99 salt, (9) production of synthetic rubber (liquid butadiene styrene rubber by butadiene method, butyl rubber, isoamyl rubber, butadiene neoprene rubber, butadiene rubber, chlorophydrin rubber), (10) production of engineering plastics and plastic alloys, (11) fine chemical industry: new products and technologies for catalytic agents, auxiliary and pigment; processing technology for the commercialization of dye (pigment); production of high-tech chemicals for electronics and paper-making, food additives, leather chemical products, oil-well auxiliaries, surface active agents, water treatment agents, adhesives, inorganic fibers, inorganic powder stuffing and equipment, (12) production of auxiliary agent, preparation agent, and dye-stuff for textile and chemical fiber ladder, (13) production of depurant of automobile tail gas, catalyzer and other assistant agents, (14) production of nature spices, synthetic spices and single ion spices, (15) production of high capability dope, (16) production of chloridized titanium white, (17) production of chlorofluorocarbon substitution, (18) production of mass coal chemical industrial products, (19) development and production of new technology and products for the forestry chemicals, (20) production of ion film for caustic soda, (21) production of biologic fertilizers, high-density fertilizers (potash fertilizers, phosphate fertilizers) and compound fertilizers, (22) development and production of new varieties of effective, low poison and low residual agriculture chemicals and pesticides, (23) development and production of biological agricultural chemicals and pesticides, (24) development and production of inorganic, organic and biological films for environmental protection, (25) comprehensive utilization and disposure of exhaust gas, discharge liquids, and waster residue.

9. Medical Industry: (1) production of material medicine under patent and administrative protection in China or chemical material medicines which China must import, (2) vitamins: production of niacin, (3) amino acids: production of serine, tryptophan, histidine, etc., (4) production of analgesic-antipyretic medicines with new techniques and new equipment, (5) production of new varieties of anti-carcinogen medicines, as well as cardiovascular and cerebrovascular medicines, (6) production of new, effective and economical contraceptive medicine and devices, (7) production of new varieties of medicines that are produced by means of biological engineering technology, (8) production of vaccines through genetic engineering technologies (vaccines against AIDS, vaccines against Hepatitis C, contraceptive vaccines, etc.), (9) development and production of medicines made from allopelagics, (10) production of diagnostic reagents for AIDS and radioimmunity diseases, (11) medicines and pharmaceuticals: production of new products and new dosage forms adopting new techniques such as slow release, controlled release, target production and absorbed through skin, (12) development and application of new varieties of adjuvant medicines, (13) processing and production of traditional Chinese herbal medicines (excluding preparation techniques for traditional Chinese medicines in small pieces ready for decoction), (14) production of biological medical materials and products, (15) production of antibiotic material medicines used for animals (including antibiotics and chemical synthesis medicines, (16) development and production of new products and new dosage forms of antibiotic medical, anthelmintic, insecticide, anti-coccidiosis medicines used for animals.

10. Chemical Fiber Manufacturing Industry: (1) production of differential chemical fibers and high/new technological fiber such as aromatic synthetic fiber, functional environmentally friendly ammo synthetic fiber with an annual production capacity of over 5,000 tons, carbon fiber, high tensible and high modulus polythene, (2) production of chemical fiber of environmental protection variety such as direct viscose and asepsis spinning, etc. , (3) production of polyster used for non-fiber with a daily production capacity of over 500 tons, and production of new type poysester used for fiber and non-fiber (polyterphthalic acide propylene ester, polysebacic acid glycol ester, polybutylene terphthalate (PBT), etc.).

11. Plastic Products Industry: (1) production of polyamide film that can keep fresh, (2) development and production of new products and new technologies for agricultural films (photolysis film, multifunctional film and raw materials, etc.), (3) reutilization and counteraction of waste and old plastic.

12. Nonmetal Mineral Products Processing Industry: (1) production of fine quality floating glass with a daily melting capacity of 500 tons or more (only in Midwest region of China), (2) production of new type dry process cement of clinker with a daily output capacity of 2,000 tons or more (only in Midwest region of China), (3) production of glass fiber (product line technology of wire drawing in tank furnace) and glass fiber reinforced plastic products with an annual capacity of 10,000 tons or more, (4) production of high level sanitation porcelain with an annual production of 500,000 pieces or more, (5) standardization refinery of ceramic material and production of high level decorative materials used for ceramics, (6) production of high-level refractory material used in furnaces for glass, ceramics and glass fiber, (7) production of inorganic, non-metal materials and products (artificial crystal, high-capability complex materials, special kinds of glass, special kinds of ceramics, special kinds of airproof materials, and special kinds of cementation materials, (8) production of new type of building materials (lightweight high-intensity and multifunctional materials for walls, high level environmental protection decorating and finishing materials, and effective thermal insulation materials), (9) deep processing of nonmetal products (super-thin comminution, high-level purity, fine production, modification).

13. Ferrous Metallurgical Smelting and Rolling Processing Industry: (1) production of direct and fusion reduced iron.

14. Non-Ferrous Metallurgical Smelting and Rolling Processing Industry: (1) smelting of gold mines with low quality or difficult to beneficiate (equity joint ventures or cooperative joint ventures only, wholly foreign owned enterprises are permitted in Western regions), (2) production of hard alloy, tin compounds, and antimony compounds, (3) production of non-ferrous composite materials, new type of alloy materials, (4) utilization of rare earths.

15. Metal Products Industry: (1) design and manufacture of non-metal molds, (2) design and manufacture of car and motorcycle molds (including plunger die, molding die, etc.) and chucking appliances (chucking appliances appliances for welding, inspection jigs, etc.), (3) development and production of high-grade hardware for construction, hot-water heating equipment and hardware parts.

16. General Machine-building Industry: (1) manufacture of numerically controlled machine tools, digital control systems, and servomechanism installations that exceed triaxiality linkage, (2) manufacture of high-performance welding robot and effective welding and assembly production equipment, (3) production of high-temperature resistant and insulation materials (within F, H insulation class), as well as insulation shaped parts, (4) production with techniques of proportional, servo-hydraulic pressure, low-power pneumatic control valves and stuffing static seals, (5) production of precision plunger dies, precision cavity molds, and standard components of molds, (6) manufacturing of precision bearings and all kinds of bearings used specifically for principal machines, (7) manufacture of casting and forging workblanks for cars and motorcycles.

17. Special Equipment Manufacturing: (1) development and manufacturing of new technology and equipment for the storage, preservation, classifying, packing, drying, transporting and processing of food, cotton, oil, vegetables, fruits, flowers, pastura plants, meat and aqua-products, (2) manufacturing of facility agricultural equipment, (3) manufacturing of new technical agriculture and forestry equipment, (4) design and manufacturing of engines for tractors, combine harvesters, etc., (5) manufacture of equipment for re-using in fields and comprehensive utilization of straws and stalks of crops, (6) manufacture of equipment for comprehensive utilization of waste agricultural products and waste fowl and livestock products that are bred in scale, (7) manufacture of water-saving irrigation using new techniques, (8) manufacture of earthwork for wet land and de-silting machines, (9) technology of hydrophily ecological syatems for protecting the environment and equipment manufacturing, (10) manufacturing of equipment for scheduling systems used in long-distance transmitting water engineering, (11) manufacture of special machines and equipment for flood prevention and emergency rescue, (12) manufacture of key equipment in the food industry such as high-speed asepsis cannng equipment and brander equipment, etc., (13) production technology and key equipment manufacturing of aminophenol, zymin, and food additives, (14) manufacturing of complete set equipment with an hourly feed processing capacity of 10 tons or more and key spare parts, (15) manufacture of multi-colored offset press for web and folio of paper or larger size, (16) manufacture of equipment with new techniques for post ornament and processing of leather, (17) manufacturing of high-tech involved special industrial sewing machines, (18) manufacturing of complete set of equipment of new types of knitting machines,, new types of paper (including pulp) making machines, (19) design and manufacture of new type of mechanical equipment for highways and ports, (20) manufacture of equipment for highways and ports, (20) manufacture of equipment for highway and bridge maintenance, automatic detection, (21) manufacture of equipment for operation supervisory control, ventilation, disaster prevention, and rescue systems for highway tunnels, (22) design and manufacture of heavy equipment for railway construction and maintenance, (23) manufacture of equipment for garden machines and tools with new techniques

(21) Manufacturing of equipment for operation supervisory control, ventilation, disaster prevention and rescue system of highway and tunnels (22) Design and manufacturing of large equipment for railway construction and maintenance (23) Manufacturing of equipment for garden machines and tools with new technique (24) Manufacturing of special equipment for cities’ sanitation and environment work (25) Manufacturing of machines for road milling and overhauling (26) Manufacturing of tunneling diggers, equipment of covered digging for city metro (27) Manufacturing of city sewage-disposal equipment with capacity of 80,000 tons/day or more, industrial sewage film treatment equipment, up-flow anaerobic tluidized bed equipment, and other biological sewage disposal equipment, recycling equipment for waste plastics, desulphurization and denitration equipment for industrial boiler, large high-temperature resistant, acid resistant bag dust remover, incinerating equipment for rubbish treatment (28) Manufacturing of turbine compressors and combined comminutors of the complete set equipment with an annual production capacity of 300,000 tons or over of synthetic ammonia, 480,000 tons or over of urea, 450,000 tons or over ethylene (29) Technique for desulfurization of thermal power station and equipment manufacturing (30) Manufacturing of sheet conticasters (31) Deep processing technique and equipment manufacturing of plate glass (32) Manufacturing of equipment for downhole trackless mining, loading and transporting, mechanical power-driven dump trucks for mining of 100 tons or over, mobile crushers, 3,000 m3 /h or over bucket excavator, 5 m3 or larger mining loader, full-section tunneling machines (33) Design and manufacturing of new instruments and equipment for prospecting and exploitation of petroleum (34) Manufacturing of cleaning equipment for electromechanical wells and production of medical (35) Manufacturing of electronic endoscopes (36) Manufacturing of medical X-ray machines set with high-frequency technique, direct digital imagery processing technique and low radiation (80kW or over) (37) Manufacturing of equipment for high magnetic field intensity and superconduct (MRI) (38) Manufacturing of machines for collecting blood plasm only (39) Manufacturing of equipment for auto elisa immuno system (including the functions of application of sample, elisa photo meter, wash plate, incubation, data, post treatment, etc.) (40) New techniques of quality control of medicine products and new equipment manufacturing (41) New analytical techniques and extraction technologies, and equipment development and manufacturing for the effective parts of traditional Chinese medicines (42) Producing and manufacturing of new packing materials, new containers for medicine, and advanced medicine producing equipment 18. Communication and Transportation Equipment Industries *(1) Manufacture of complete automobiles (including R&D activities) (2) Manufacture of engines for automobiles (including R&D activities) (3) Manufacture of key spare parts for automobiles: complete disc brakes, complete driving rods, automatic gearboxes, fuel pumps of diesel engine, inhalant supercharger of engines, electromotion steering system, adhesive axial organ(used for four-wheel drive), gas filling vibration abosorber,air spring, hydraulic tappet, cluster gauge (4) Production of automobile electronic devices(including engine control system, underchassis control system, autocar body electric control system) (5) Manufacture of vehicles for special-purpose in petroleum industry: vehicles for deserts, etc. (6) Technology and equipment for railway transportation: design and production of locomotives and main parts, design and production of equipment for railways and bridges, related technology and equipment production for rapid transit railway, production of equipment for communicational signals and transportation safety monitoring, production of electric railway equipment and instrument (7) Equipment for urban rapid transit track transportation: design and manufacture of sc( of powered car and main parts for metro, city light rail (8) Design and manufacture of civil planes (Chinese partner shall hold the majority of shares) (9) Production of spares parts for civil planes (10) Design and manufacture of civil helicopters {Chinese partner shall hold the majority of shares) (11) Design and manufacture of aeroplane engines (Chinese partner shall hold the majority of shares) (12) Design and manufacture of civil air-borne equipment (Chinese partner shall hold the majority of shares) (13) Manufacture of light gas-turbine engine (14) Design and manufacture of crankshafts of low-speed diesel engine for vessel (15) Repairing, design and manufacture of special vessels, high-performance vessels (the Chinese party shall hold the relative majority of shares) (16) Design and manufacture of the equipment and accessories of high-speed diesel engines, auxiliary engines, radio communication and navigation for vessels (the Chinese party should hold relative majority shares) (17) Manufacture of fishing boats and yachts made of glass fibre reinforced plastic 19. Electric Machinery and Equipment Industries (1) Fire power equipment: manufacture of super-critical units of over 600,000 KW, large gas turbines, gas-steam combined cycle power equipments of over 100,000 KW, coal gasification combined cycle technique and equipment (IGCC), pressure boost fluidized bed (PFBC), large scale air cooling generating units of over 600,000 KW, large scale cycle fluidized bed (CFB) boiler(limited to equity joint ventures and cooperative joint ventures) (2) Hydropower plant equipment: manufacture of large pump-storage power units of 150,000kW and over, large tubular turbine units of 150,000KW or over (equity joint ventures or contractual joint ventures only) (3) Nuclear-power plant equipment: manufacture of power units of 600,000KW or over (equity joint ventures or contractual joint ventures only) (4) Power transmitting and transforming equipment: manufacture of super high-voltage DC power transmitting and transforming equipment of 500 KW or over (equity joint ventures or contractual joint ventures only) 20. Electronic and Telecommunications Industries (1) Manufacture of digital television, digital video camera, digital record player, digital sound-playing equipment (2) Manufacture of new type plate displays, medium and high resolution color kinescope and glass shielding (3) Manufacture of devices, such as key optic engine, light source, projection screen, high resolution projection tube and LCOS module used in large screen color projection display (4) Manufacture of digital audio and visual coding or decoding equipment, digital broadcasting TV studio equipment, digital cable TV system equipment, digital audio broadcast transmission equipment (5) Design of integrated circuit and production of large scale integrated circuit with a line width of 0.35 micron or smaller (6) Manufacture of medium- and large-sized computers, portable microcomputers, high-grade server (7) Development and manufacture of drivers of high capacity compact disk and disk and related parts (8) Manufacture of 3-dimension CAD, CAT, CAM, CAE and other computer application system (9) Development and manufacture of software (10) Development and production of materials specific for semi-conductor and components (11) Manufacture of electronic equipment, testing equipment, tools and moulds (12) Manufacture of new type electronic components and parts (slice components, sensitive components, sensors, frequency monitoring and selecting components, hybrid integrated circuit, electrical and electronic components, photoelectric components, new type components for machinery and electronics) (13) Manufacture of hi-tech green batteries: non-mercury alkali-manganese batteries, powered nickel-hydrogen batteries, lithium-ion batteries, high-capacity wholly sealed maintenance-proof lead-acid accumulators, fuel batteries, pillar-shaped zinc-air batteries (14) Development and manufacture of key components for high-density digital compact disk driver (15) Reproduction of read-only compact disk and manufacture of recordable compact disk (16) Design and manufacture of civil satellites {Chinese partner shall hold the majority of shares) (17) Manufacture of civil satellites effective payload (Chinese partner shall hold the majority of shares) (18) Manufacture of spare pans for civil satellites (19) Design and manufacture of civil carrier rockets (Chinese partner shall hold the majority of shares) (20) Manufacture of telecommunication system equipment for satellites (21) Manufacture of receiving equipment of satellite navigation and key components (equity joint ventures or contractual joint ventures only) (22) Manufacture of optical fibre preformrod (23) Manufacture of serial transmission equipment of digital microwave synchronization of 622 MB/S (24) Manufacture of serial transmission equipment of phototiming synchronization of 10 GR/S (25) Manufacture of equipment for cut-in communication network with broad bond (26) Manufacture of optical cross-linking equipment (OXC) (27) Manufacture of ATM and IP data communication system (28) Manufacture of mobile communication systems (GSM, CDMA, DCS1800, DECT, IMT2000): mobile telephone, base station, switching equipment and digital colonization system equipment (29) Development and manufacture of high-end router, network switchboard of gigabit per second or over (30) Manufacture of equipment for air traffic control system (equity joint ventures or contractual joint ventures only) 21. Machinery Industries for Instrument and Meter, Culture and Office (1) Development and production of digital cameras and key components (2) Development and manufacture of precision on-line measuring instrument (3) Manufacture of new technical equipment for safe production and environment protection detecting instrument (4) Manufacture of new-tech equipment of water quality and fume on-line detecting instrument (5) Manufacture of instrument and equipment for hydrological data collecting, processing, transmitting and flood warning (6) Production of new type of meters’ spare parts and materials (mainly new switches and function materials for meters such as intelligent sensors, socket connector, flexible circuit board, photoelectric switches and proximity switches.) (7) Manufacture of new type printing devices (laser printers, ink-jet printers) (8) Maintenance of precision instrument and equipment, post-sale services 22. Other Manufacture Industries (1) Development and utilization of clean-coal technical product (coal gasification, coal liquefaction, water-coal, industrial lump-coal) (2) Coal ore dressing by washing and comprehensive utilization of powered coal (including desulphurized plaster), coal gangue.

IV. Production and Supply of Power, Gas and Water

1. Construction and management of thermal-power plants with a single unit installed capacity of’300,000kW or above 2. Construction and management of power plants with the technology of clean coal burning 3. Construction and management of heat power plants 4. Construction and management of power plants with natural gas; 5. Construction and management of hydropower stations with the main purpose of power generating 6. Construction and management of nuclear-power plants (Chinese partner shall hold the majority of shares) 7. Construction and management of new energy power plants (solar energy, wind energy, magnetic energy, geothermal energy, tide energy and biological mass energy, etc.) 8. Construction and management of urban water plants.

V. Water Resources Management Industry

1. Construction and management of key water control projects for comprehensive utilization (the Chinese party shall hold the relative majority of shares)

VI. Communication and Transportation, Storage, Post and Telecommunication Services

1. Construction and management of grid of national trunk railways (Chinese partner shall hold the majority of shares) 2. Construction and management of feeder railways, local railways and related bridges, tunnels and ferry facilities (equity joint ventures or contractual joint ventures only) 3. Construction and management of highways, independent bridges and tunnels 4. Construction and management of public dock facilities of ports 5. Construction and management of civil airports (the Chinese party shall hold the relative majority of shares) 6. Air transportation companies (Chinese partner shall hold the majority of shares) 7. General aviation companies for agriculture, forest and fishery (equity joint ventures or contractual joint ventures only) *8. International liner and tramp maritime transportation business *9. International containers inter-model transportation *10. Road freight transportation companies 11. Construction and management of oil (gas) pipelines, oil (gas) depots and petroleum wharf 12. Construction and management of the facilities of coal delivery pipelines 13. Construction and management of storage facilities relating to transportation services

VII. Wholesale and Retail Trade Industry

*1. Wholesale, retail and logistic distribution of general goods

VIII. Real Estate Industry

1. Development and construction of ordinary residential houses

IX. Social Service Industry

1. Public Facility Service Industries (1) Construction and management of urban access-controlled roads (2) Construction and management of metro and city light rail (Chinese partner shall hold the majority of shares) (3) Construction and management of treatment plants for sewage, garbage, the dangerous wastes (incineration and landfill), and the facilities of environment pollution treatment 2. Information. Consultation Service Industries (1) Information consulting agencies of international economy, science and technology, environmental protection *(2) Accounting and auditing

X. Public Health, Sports and Social Welfare Industries

1. Service agencies for the elderly and the handicapped.

XI. Education, Culture and Arts, Broadcasting, Film and TV Industries

1. Higher education institutes (equity joint ventures or contractual joint ventures only) XII. Scientific Research and Poly-technical Services Industries 1. Biological engineering technique and bio-medical engineering technique 2. Isotope, irradiation and laser technique 3. Ocean and ocean energy development technology 4. Seawater desalting and seawater utilization technology 5. Oceanic monitoring technology 6. Development of energy-saving technology 7. Technology for recycling and comprehensive utilization of resources 8. Technology for environment pollution treatment and monitoring 9. Technology for preventing from desertification and desert improvement 10. Application technique of civil satellite 11. Research and development centers 12. Centers for hi-tech, new products developing, and incubation of enterprises XIII. Permitted foreign invested projects whose products are to be wholly exported directly

Restricted Category

I. Farming, Forestry, Animal Husbandry and Fishery Industries

1. Development and production of grain (including potatoes), cotton and oil-seed (Chinese partner shall hold the majority of shares) 2. Processing of the logs of precious varieties of trees {equity joint ventures or contractual joint ventures only)

II. Mining and Quarrying Industries

1. Exploring and mining of minerals such as wolfram, tin, antimony, molybdenum, barite, fluorite (equity joint ventures or contractual joint ventures only) 2. Exploring and mining of precious metals (gold, silver, platinum families) 3. Exploring and mining of precious non-metals such as diamond 4. Exploring and mining of special and rare kinds of coal (Chinese partner shall hold the majority of shares) 5. Mining of szaibelyite and szaibelyite iron ores 6. Mining of Celestine.

III. Manufacturing Industries 1. Food Processing Industry (1) Production of millet wine and spirits of famous brands (2) Production of soda beverage of foreign brand (3) Production of synthetic sweet agent such as saccharin (4) Processing of fat or oil 2. Tobacco Processing Industry (1) Production of cigarettes and filter tips 3. Textile Industry (1) Wool spinning, cotton spinning (2) Silk reeling 4. Printing and Record Medium Reproduction Industry (1) Printing of publications (Chinese partner shall hold the majority of shares except printing of package decoration) 5. Petroleum Processing and Coking Industries (1) Construction and management of refineries 6. Chemical Raw Material and Products Manufacturing Industry (1) Production of ionic membrane caustic soda (2) Production of sensitive materials (3) Production of benzidine (4) Production of chemical products from which narcotics are easily made (ephedrine, 3, 4-idene dihydro phenyl-2-acctonc, phenylacetic acid, 1-phenyl-2-acetone, heliotropin, safrole, isosafrole, acetic oxide) (5) Production of sulphuric acid basic titanium white (6) Processing of baron, magnesium, iron ores (7) Barium salt production 7. Medical and Pharmaceutical Products Industry (1) Production of chloramphenicol, penicillin G, lincomycin, gentamicin, dihydrostreptomycin, amikacin, tetracycline hydrochloride, oxytetracycline, medemycin, kitasamycin, ilotyin, ciprofloxacin and offoxacin (2) Production of analgin, paracetamol, Vitamin B1, Vitamin B2, Vitamin C, Vitamin E (3) Production of immunity vaccines, bacterins, antitoxins and anatoxin (BCG vaccine, poliomyelitis, DPT vaccine, measles vaccine, Type-B encephalitis, epidemic cerebrospinal meningitis vaccine) which included in the State’s Plan (4) Production of material medicines for addiction narcotic and psychoactivc drug (Chinese partner shall hold the majority of shares) (5) Production of blood products (6) Production of non-self-destructible expendable injectors, transfusion systems, blood transfusion systems, blood bags 8. Chemical Fibre Production Industry (1) Production of chemical fibre drawnwork of conventional chipper (2) Production of viscose staple fibre with an annual single thread output capacity of less than 20,000 tons (3) Production of polyester and spandex used for fibre and non-fibre with a daily production capacity of less than 400 tons 9. Rubber Products (1) Cross-ply and old tire recondition (not including radial tire), and production of industrial rubber fittings of low-performance 10. Non-Ferrous Metal Smelting and Rolling Processing Industry (1) Smelting and separation of rare earth metal (equity joint ventures or contractual joint ventures only) 11. Ordinary Machinery Manufacturing Industry (1) Manufacture of containers (2) Manufacture of small and medium type ordinary bearings (3) Manufacture of truck cranes of less than 50 tons (equity joint ventures or contractual joint ventures only) 12. Special Purpose Equipment Manufacturing Industry (1) Production of low or middle class type-B ultrasonic displays (2) Manufacture of equipment for producing long dacron thread and short fibre (3) Manufacture of crawler dozers of less than 320 horsepower, wheeled mechanical loaders of less than 3 cubic meter (equity joint ventures or contractual joint ventures only) 13. Electronic and Telecommunication Equipment Manufacturing Industry (1) Production of satellite television receivers and key parts.

IV. Production and Supply of Power, Gas and Water 1. Construction and operation of conventional coal-fired power plants whose unit installed capacity is less than 300,000kW (with the exception of small power grid).

V. Communication and Transportation, Storage, Post and Telecommunication Services 1. Road passenger transportation companies *2. Cross-border automobile transportation companies *3. Water Transportation companies *4. Railway freight transportation companies 5. Railway passenger transportation companies (Chinese partner shall hold the majority of shares) 6. General aviation companies engaging in photographing, prospecting and industry (Chinese partner shall hold the majority of shares) *7. Tele communication companies.

VI. Wholesale and Retail Trade Industries *l. Commercial companies of commodity trading, direct selling, mail order selling, Internet selling, franchising, commissioned operation, sales agent, commercial management companies, and wholesale, retail and logistic distribution of grain, cotton, vegetable oil, sugar, medicines, tobaccos, automobiles, crude oil, capital goods for agricultural production *2. Wholesale or retail business of books, newspaper and periodicals *3. Distributing and selling of audiovisual products (excluding movies) 4. Commodity auctions *5. Goods leasing companies *6. Agencies (ship, freight forwarding, tally for foreign vessels, advertising) *7. Wholesaling product oil. and construction and operation of gasoline stations 8. Foreign trade companies.

VII. Banking and Insurance Industries

1. Banks, finance companies, trust investment companies *2. Insurance companies *3. Security companies, security investment fund management companies 4. Financial leasing companies 5. Foreign exchange brokage *6. Insurance brokage companies.

VIII. Real Estate Industry

1. Development of pieces of land (equity joint ventures or contractual joint ventures only) 2. Construction and operation of high-ranking hotels, villas, high-class office buildings and international exhibition centers 3. Construction and operation of large scale theme park.

IX. Social Service Industry 1. Public Facility Service Industries (1) Construction and operation of networks of gas, heat, water supply and water drainage in large and medium sized cities (Chinese partner shall hold the majority of shares) 2. Information, Consultation Service Industries (1) Legal consulting (2) Market Research (equity joint ventures or contractual joint ventures only).

X. Public Health, Sports and Social Welfare Industries

1. Medical treatment establishments (equity joint ventures or contractual joint ventures only) 2. Construction and operation of golf courts
XI. Education, Culture and Arts, Broadcasting, Film and TV Industries

1. Education establishments for senior high school students (equity joint ventures or contractual joint ventures only) 2. Construction and operation of cinemas (Chinese partner shall hold the majority of shares) 3. Production and publication of broadcasting and TV programs and film-making (Chinese partner shall hold the majority of shares)

XII. Scientific Research and Poly-technical Services Industries

1. Mapping companies (Chinese partner shall hold the majority of shares) *2. Inspection, verification and attestation companies for imported and exported goods.

XIII. Other industries restricted by the State or international treaties that China has concluded or taken part in.

Prohibited Category

I. Farming, Forestry, Animal Husbandry and Fishery Industries

1. Cultivation of China’s rare precious breeds (including tine genes in plants industry, husbandry and aquatic products industry) 2. Production and development of genetically modified plants’ seeds 3. Fishing in the sea area within the Government jurisdiction and in in-land water.

II. Mining and Quarrying Industries

1. Exploring, mining and dressing of radioactive mineral products 2. Exploring, mining and dressing of rare earth metal
III. Manufacturing Industry

1. Food Processing Industry (1) Processing of green lea and special tea with China’s traditional crafts (famous tea, dark tea, etc.) 2. Medical and Pharmaceutical Products Industry (1) Processing of traditional Chinese medicines that have been listed as the State protection resources (musk, licorice, jute, etc.) (2) Application of preparing technique of traditional Chinese medicines in small pieces ready for decoction, and production of the products of secret recipe of traditional Chinese patent medicines 3. Non-Ferrous Metal Smelting and Rolling Processing Industry (1) Smelting and processing of radioactive mineral products 4. Manufacture of Weapons and Ammunition 5. Other Manufacturing Industries (1) Ivory carving (2) Tiger-hone processing (3) Production of bodiless lacquerware (4) Production of enamel products (5) Production of Xuan-paper (rice paper) and ingot-shaped tablets of Chinese ink (6) Production of carcinogenic, teratogenic, mutagenesis and persistent organic pollutant products.

IV. Production and Supply of Power, Gas and Water

1. Consiruction and operation of power network .

V. Communication and Transportation, Storage. Post and Telecommunication Services 1. Companies of air traffic control 2. Companies of postal services.

VI. Finance, Insurance Industries

1. Futures companies

VII. Social Service Industry

1. Development of wild animal and plant resources protected by the State 2. Construction and operation of animal and plant natural reserves 3. Social investigation 4. Gambling (including the racecourse for gambling) 5. Pornographic services

VIII. Education, Culture and Arts, Broadcasting, Film and TV Industries

1. Educational institutes for basic education (compulsory education) 2. Business of publishing, producing, master issuing, and importing of books, newspaper and periodical 3. Business of publishing, producing, master issuing and importing of audio and visual products and electronic publications 4. News agencies 5. Radio stations, TV stations, radio and TV transmission networks at various levels (transmission stations, relaying stations, radio and TV satellites, satellite up-linking stations, satellite receiving stations, microwave stations, monitoring stations, cable broadcasting and TV transmission networks) 6. Companies of publishing and playing of broadcast and TV programs 7. Companies of films issuing 8. Companies of video tape showing .

IX. Other Industries

1. Projects that endanger the safety and performance of military facilities.

X. Other industries restricted by the State or international treaties that China has concluded or taken part in Note: 1.In the case that the Mainland/Hong Kong Closer Economic Partnership Arrangement and its supplement or the Mainland/Macao Closer Economic Partnership Arrangement and its supplement have prescribed specific rules, those regulations shall be observed. 2.The items marked “*” are related to the commitment of China’s accession to WTO. Please see the Attachment for details.

Notes

All activities not mentioned above are generally classified as “Permitted”.

Notes for Catalogue of Encouraged Industries:

1. Prospecting and exploitation of oil and natural gas: In cooperation with Chinese partner only. 2. Exploitation of oil deposits (fields) with low osmosis: In cooperation with Chinese partner only. 3. Development and application of new technologies that can increase recovery factor of crude oil: In cooperation with Chinese partner only. 4. Development and application of new technologies for prospecting and exploitation of petroleum, such as geophysical prospecting, well-drilling, well-logging and downhole operation, etc.: In cooperation with Chinese partner only. 5. Manufacturing of automobile and motorcycle: The proportion of foreign investments shall not exceed 50%. 6. International liner and tramp maritime transportation business: The proportion of foreign investments shall not exceed 49%. 7. International container multi-modal transportation: The proportion of foreign investments shall not exceed 50%. Foreign majority ownership will be permitted no later than Dee. 11, 2002. Wholly foreign ownership will be permitted no later than Dec. 11, 2005. 8. Road freight transportation companies: Foreign majority ownership will be permitted no later than Dec. 11, 2002. Wholly foreign ownership will be permitted no later than Dec. 11, 2004. 9. Wholesale, retail and logistic distribution of general goods: As described in No. 5 of Notes for Catalogue of Restricted Industries of the Attachment,10 Accounting and auditing: In cooperation with Chinese partner and in the form of partnership only.

2. Notes for Catalogue of Restricted Industries:

1. Cross-border automobile transportation companies: Foreign majority ownership will be permitted no later than Dec. 11. 2002. Wholly foreign owned enterprises will be permitted no later than Dec. 11,2004. 2. Water transportation companies.: The proportion of foreign investment shall not exceed 49%. 3. Rail freight transportation companies: The proportion of foreign investment shall not exceed 49%. Foreign majority ownership will he permitted no later than Dec. 11. 2004. Wholly foreign owned enterprises will be permitted no later than Dec, 11. 2007. 4. Telecommunication Companies (1) Value-added services and paging services in basic telecommunication services: Foreign investments are permitted no later than Dec. 11, 2001 with the proportion of foreign investment not exceeding 30%. The proportion of foreign investment in joint venture shall not exceed 49% no later than Dec. 11. 2002, and shall be allowed to reach 50% no later than Dec. 11, 2003. (2) Mobile voice and data services in basic telecommunication services; Foreign investments are permitted no later than Dec. 11, 2001 with the proportion of foreign investment not exceeding 25%. The proportion of foreign investment in joint venture shall not exceed 35% no later than Dec. 11, 2002 and shall be allowed to reach 49% no later than Dec. 11, 2004. (3) Domestic and international services in basic telecommunication services: Foreign investments will be permitted no later than Dec. 11, 2004 with the proportion of foreign investment not exceeding 25%. The proportion of foreign investment in joint venture shall not exceed 35% no later than Dec. 11, 2006 and shall be allowed to reach 49% no later than Dec. 11, 2007. 5. Commodities trade, direct selling, mail-order selling. Internet selling, sales agent, franchising, commercial management; whole sale, retail and logistic distribution of grain, cotton, vegetable oil, sugar, pharmaceutical products, tobacco, automobile, crude oil, capital goods for agricultural production; whole sale and retail of books, newspapers, periodicals; whole sale of product nil, construction and operation of gasoline station (1) Commission agents’ services and wholesale trade services (excluding salt, tobacco): Foreign invested enterprises are permitted no later than Dec. 11, 2002 with foreign investment not exceeding 50%, but can not engage in the distribution of books, newspapers, magazines, pharmaceutical products, pesticides, mulching films, chemical fertilizers, processed oil and crude oil. Foreign majority ownership will be permitted no later than Dec. 11, 2003. And wholly foreign-owned enterprises will be permitted no later than Dec. 11, 2004, and can engage in the distribution of books, newspapers, magazines, pharmaceutical products, pesticides, mulching films. The distribution of chemical fertilizers, processed oil and crude oil are permitted no later than Dec. 11,2006. (2) Retailing services (excluding tobacco): Foreign invested enterprises are permitted but can not engage in the distribution of books, newspapers, magazines, pharmaceutical products, pesticides, mulching films, chemical fertilizers, processed oil. The proportion of foreign investment can reach 50% no later than Dec. 11, 2002, and can engage in the distribution of books, newspapers and magazines. Foreign majority ownership will be permitted no later than Dee. 11, 2003. And wholly foreign-owned enterprises will be permitted no later than Dee. 11, 2004, and can engage in the distribution of pharmaceutical products, pesticides, mulching films, and processed oil. The distribution of chemical fertilizers are permitted no later than Dec. 11, 2006. Foreign investors can not take majority ownership of a Chain-store that has over 30 branch stores and engages in the distribution of automobiles (the limitation will be lift no later than Dec. 11, 2006), books, newspapers, magazines, pharmaceutical products, pesticides, mulching films, processed oil, chemical fertilizers, grain, vegetable oil, sugar, tobacco, cotton. (3) Franchising and wholesale or retail trade services away from a fixed location: Foreign invested enterprises are permitted no later than Dec. 11, 2004. 6. The distribution of audiovisual products (excluding movies): Foreign investments shall be permitted no later than Dee.11, 2004. 7. Goods leasing companies: Foreign majority ownership shall be permitted no later than Dec.11,2002. Wholly foreign owned enterprises shall be permitted no later than Dec. 11,2004. 8. Agencies (1) Ship agencies: The proportion of foreign investment shall not exceed 49%. (2) Freight forwarding agencies (excluding those services specially reserved for Chinese postal authorities): The proportion of foreign investment shall not exceed 50% (not exceed 49% in the case of courier services). Foreign majority ownership shall be permitted no later than Dec. 11, 2002. Wholly foreign owned enterprises shall be permitted no later than Dec. 11, 2005. (3) Cargo handling for foreign vessels: In forms of equity joint ventures or contractual joint ventures only (4) Advertising agencies: Tile proportion of foreign investment shall not exceed 49%. Foreign majority ownership shall be permitted no later than Dec. 11, 2003. Wholly foreign owned enterprises shall be permitted no later than Dec. 11, 2005. 9. Insurance (1) Non-life insurance companies: The proportion of foreign investments shall not exceed 51%. Wholly foreign owned enterprises shall be permitted no later than Dec. 11, 2003. (2) Life insurance companies: The proportion of foreign investments shall not exceed 50%. 10. Securities company, securities investment fund management companies (1) Securities companies: Foreign investments shall be permitted no later than Dee. 11, 2004 with the proportion of foreign investment not exceeding 1/3. Securities investment fund management companies: The proportion of foreign investment shall not exceed 33%. The proportion of foreign investment shall be allowed to reach 49% no later than Dec. 11, 2004. 11. Insurance brokage companies: The proportion of foreign investment shall not exceed 50%. The proportion shall be allowed to reach 51% no later than Dec. 11, 2004. Wholly foreign owned enterprises shall be permitted no later than Dec. 11,2006. 12. Companies of inspection, verification, attestation for imported and exported goods: Foreign majority ownership shall be permitted no later than Dee. 11, 2003. Wholly foreign owned enterprises shall be permitted no later than Dec. 11, 2005.