China's negative list 'at the right time' this year

World
Europe

03:03

‍As trade tensions ratchet up globally, China is fighting protectionism with fewer restrictions.

One of Beijing's efforts in this regard is a shortened negative list for foreign investment so international companies get better access to the Chinese market. Denis Depoux, deputy head of Asia at global consultancy Roland Berger, said the negative list, issued in late June this year, came exactly "at the right time" this year.

"I see every year everybody is waiting for the negative list update," said Depoux, adding that every year people complain about the announcement of the list coming too late or being too shallow.

However, this year is different because of two reasons.

"First of all, it’s indeed a lot shorter. So basically this is keeping the promise of reform, or further reform… I think also if you look at the content of it, there are two restrictions totally removed on new energy vehicles, on aviation, on some of the infrastructure, energy and transport," said the expert.

Depoux argued that sectors including banking and insurance are seeing a lot of change, which means reforms are not cosmetic as some people have criticized, but rather practical.

"You also saw a bit of dynamics for some sectors like banking, insurance, and there’s a deadline set for three years from now. So it gives a lot more clarities than before."

02:42

Depoux said the negative list is not only an answer to recent trade tensions, but also a response to long-standing claims for reciprocity aired by the US and European companies.

However, that’s not enough. According to Depoux, more needs to be done despite removing some of the restrictions and shortening the negative list being important.

"For example, there are a lot of operational hurdles along licensing, standards, and norms. That’s the daily life of companies doing business in china."

Depoux said those rules may not be necessarily different in other countries, "but that’s the reality here as well."

"You need to remove the restrictions in the first place. Further shortening the negative list would be the second thing," he said.

Some investors are concerned that there are more legislations meant to block Chinese deals when Chinese companies are back on the acquisition trail. However, Depoux confidently noted that Chinese holdings are welcomed all across Europe and businesses are actually going on, even if Chinese companies need to be a bit more cautious.