The Catalogue for the Guidance of Foreign Investment Industries (Amended in 2011) (the “Catalogue”), which shall come into force as of January 30th, 2012 and replace the old version of the Catalogue promulgated on October 31, 2007.

The new Catalogue includes 473 items in total - 354 encouraged items, 80 restricted items and 39 prohibited items.

The major amendments to the content of the new Catalogue are as follows:

a. The opening-up has been further expanded.

In addition to 3 new encouraged items, 7 original restricted items and 1 original prohibited item are cancelled. Meanwhile, restrictions over the proportion of foreign equity in certain areas are cancelled.

b. Promote the Reform and Upgrade Manufacturing Industry

High-end manufacturing industries are designated as key areas in which foreign investments are encouraged. In terms of encouraged items, new products and new technologies in textile, chemical and mechanism manufacturing industries are added while automobile manufacturing industry is cancelled. Besides, poly-silicon and coal chemical industries are also cancelled in order to relieve the problems of surplus production capacity and irrational redundant construction in these industries.

c. Develop Strategic Emerging Industries

Investments in strategic emerging industries are encouraged, such as energy-conserving and environment-protective industries and new generation of information technology industries. For example, pivotal parts of new-energy automobiles and equipments for the next generation of Internet system based on IPv6 are added to the encouraged items. LCD panel of the encouraged items is specified to be more advanced than 6th generation.

d. Promote the Service Sector

Foreign investment in modern service sectors are encouraged for the purpose of industrial reconstruction. Regarding service sector in the new Catalogue, nine encouraged items are added, including charging station for motor vehicles. Foreign-invested medical institution and financial leasing companies are changed from restricted items to permitted items.

e. Achieve Balanced Development among Different Regions

For the purpose of industrial transfer and regional development, some encouraged items released from the new Catalogue will be taken into consideration during the amendment of Catalogue of Advantaged Industries for Foreign Investment in the Central-Western Region.

Conclusion

The amendments mentioned above revolve closely around the theme of accelerating the economic reform in the direction of China’s economic development, and place great emphasis on improving the foreign investment structure, promoting technological innovation, as well as upgrading industries.