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Project review and approval will no longer be required for most foreign investment
projects according to China's new catalogue

18 December 2013 

On 2 December 2013, the PRC State Council promulgated the Catalogue of Governmental Approval Investment Projects (2013 version) which has been implemented as from the date of promulgation. In the circular on promulgation of this Catalogue, the State Council emphasized that a purpose of the Catalogue is “to make the market play a decisive role in allocating resources”. The Catalogue explicitly stipulates that only the projects listed in the Catalogue are subject to governmental approval, while all the other projects are subject to filing procedures.
Currently in China, not only the establishment and alteration of foreign investment enterprises require approval, their fixed asset investment projects falling in prescribed scope also require approval. Compared to the)Catalogue of Governmental Approval Investment Projects (2004 version), the new Catalogue has significantly shrunk the scope of the projects which require project review and approval, namely only the following three categories of the foreign invested fixed asset investment projects are still subject to approval:
1. 11 kinds of projects as specifically listed in the new Catalogue;
2. The restricted projects prescribed in the Guidance Catalogue of Foreign Investment Industries, among which, any restricted project (excluding real estate restricted project) with a total investment (including capital increase) of US$50 million or above shall be subject to review and approval by department of State Council in charge of investment; while any restricted project with a total investment below US$50 million, and any real estate restricted project regardless how much its total investment is, shall be subject to review and approval by the government at provincial level; and
3. The encouraged projects which must be controlled (absolutely or relatively) by the Chinese parties as required by the Guidance Catalogue of Foreign Investment Industries (totally 18 items only), among which, any project with a total investment (including capital increase) of US$300 million or above shall be subject to review and approval by department of State Council in charge of investment; while any project with such an amount below US$300 million shall be subject to review and approval by the local government.
In other words, except for the projects above mentioned, for the vast majority of encouraged projects, and for all the permitted projects (i.e. the projects not listed in the Guidance Catalogue of Foreign Investment Industries), no matter how much the total investment (including capital increase) of a project is, the approval is not required, and instead, a filing procedure is to be carried out.

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Disclaimer
Any legal information contained in this newsletter is general in nature and laws and regulations are changing from time to time and compliance will always depend upon the particular circumstances. We have not attempted to give exhaustive descriptions of law or to give a legal opinion on specific legal issues. You should not rely on this newsletter as a legal advice for any particular purpose.

 

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