On 31 July 2020, China’s National Development and Reform Commission and the Ministry of Commerce on June 30 jointly seek public opinions on the Catalogue of Encouraged Industries for Foreign Investment (2020 Version). The deadline for feedback is 30 August 2020.

Compared with the 2019 version, 125 items have been added and 76 items have been modified, among which 56 items have been added to the nationwide encouraged catalogue for foreign investment and 40 items have been modified, while the catalogue of advantageous industries in China’s central, western and northeastern regions has introduced 69 new items and modified 36 items.

This revision mainly focuses on promoting high-quality development of the manufacturing industry and improving the capacity of the central and western regions and the northeast to undertake industrial transfer, as well as upgrading domestic consumption needs. The major revised contents include:

1. Further encourage foreign investment in the high-quality development of the manufacturing sector. Manufacturing of some raw materials, spare parts and end products have been added or extended to the nationwide encouraged catalogue for foreign investment. Encourage foreign investment in high-tech areas, for example: R&D and manufacturing of virtual reality (VR) and augmented reality (AR) equipment, development of cloud computing equipment, software and system; manufacturing of wearable smart devices, intelligent unmanned aircraft, service robots and other smart consumption devices; manufacturing of smart home platform system and equipment, and so on.
   
   
2. Further encourage foreign investment in the production service sector. The nationwide encouraged catalogue for foreign investment adds or expands the items of research and development, design, business service, modern logistics, information service and so on.
   
   
3. Further encourage foreign investment in China’s central, western and northeastern regions. In accordance with the needs of expanding opening up and attracting investment in each region, the relevant items have been added or extended in the catalogue of advantageous industries in China’s central, western and northeastern regions. Some items related to exhibition, logistics, e-commerce in the regional catalogue have been transferred to the nationwide catalogue.

According to China’s current regulations, foreign invested enterprises fall under the encouraged catalogue for foreign investment may enjoy the following preferential policies:

1. The import tariff and import value-added tax for the self-used equipment imported within the total investment will be exempted.
   
   
2. Eligible encouraged foreign invested enterprises in China’s central, western and northeastern regions may enjoy a reduced enterprise income tax rate of 15%.
   
   
3. For the encouraged foreign invested industrial projects with intensive land use, land can be preferentially supplied and the reserve price for land transfer can be determined at 70% of the national minimum standard for the transfer of industrial land, which shall not be lower than the local land.

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