What overseas investors can and can’t own in China: the negative list, explained

There are two lists, not one

Almost every English-language summary of “China’s negative list” quietly merges two separate instruments, which is why you will see the item count reported as 29, 106 or 117 depending on which article you read. They are all correct about different documents.

List 1 — Foreign Investment Access, and how short it has become

The Foreign Investment Access Negative List works on a principle of “entry unless prohibited”. If your activity is not named on it, a foreign investor is entitled to national treatment — the same rules as a Chinese investor — and may generally hold up to 100% of the equity.

The 2024 version cut the list from 31 entries to 29 and, most consequentially, removed the last remaining restrictions in manufacturing. Publication printing and certain traditional Chinese medicine processing were the two entries deleted. What remains is concentrated where you would expect: publishing and media, telecoms and internet services, education, some agriculture and seed breeding, certain professional services, and a small number of outright prohibitions covering areas the state reserves entirely.

Free-trade zones sometimes run a shorter list still, and Hainan Free Trade Port operates its own. If you are close to a restricted line, where you register can change the answer.

List 2 — Market Access, which applies to everyone

This is the list foreign founders discover late. It governs whether a private investor of any nationality may enter a sector, and its 2025 version covers 106 items — down from 117, the largest single reduction since the list began in 2018. Six are absolute prohibitions; the rest require a permit from a named regulator.

Off both lists still isn’t the same as “open”

Clearing both lists gets you the right to register. It does not get you the right to operate in a regulated activity. Food and beverage, medical devices, cosmetics, financial services, freight forwarding, human resources services, telecoms value-added services and dozens of others each carry their own sector permit, granted by their own regulator, on their own timetable — and a permit application usually cannot begin until the company legally exists. That sequencing catches people out: you fund and register an entity, then wait months for the licence that makes it useful.

Business scope: the third gate

Chinese companies do not have open-ended capacity. Each carries a registered business scope (经营范围) on its licence, and it may lawfully invoice only for activities inside that scope. Get the scope wrong and the consequences are practical rather than dramatic: the tax bureau declines to let you issue the fapiao your customer is asking for, and your bank queries incoming payments that do not match what you are registered to do.

Scope drafting is therefore a real design decision, not boilerplate. Draw it too narrowly and you re-file every time the business shifts. Draw it too broadly and you sweep in a licensed activity, which can hold up the whole registration until you produce a permit you never intended to need. You can read any Chinese company’s scope for free on the national enterprise registry — including your competitors’, which is the fastest way to see how a compliant scope in your sector is actually worded.

The workarounds, and what they cost you

• The VIE structure. Contractual control rather than equity ownership, long used to put foreign capital behind restricted internet and education businesses. It is tolerated rather than blessed, it has never been affirmed as valid by a Chinese court on its core question, and it prices badly with acquirers and regulators. Not a decision to make from a blog post.
• A minority joint venture. Where the list imposes an equity cap, a genuine JV is the intended route. The risk is ordinary commercial risk — control, deadlock and exit — rather than regulatory risk.
• Don’t enter at all. Underrated. If your only real link to China is suppliers or a distributor, you may need no Chinese entity whatsoever — see do you actually need a Chinese company?

Nominee shareholding — putting the company in a Chinese friend’s or employee’s name to sidestep a restriction — deserves its own warning. It is not a structure; it is an unenforceable promise, and it has produced more expatriate horror stories than any other arrangement in China.

Quick FAQ

Where do I actually check the lists?

Both are published by the NDRC and MOFCOM and are freely available in Chinese. The versions that matter are the Special Administrative Measures for Foreign Investment Access (2024 Version) and the Market Access Negative List (2025 Version). Beware undated English summaries — a great deal of what ranks online still describes the 2020 or 2021 lists.

Does the negative list change often?

It has been revised most years since 2018, and the direction has consistently been shorter. That is good news, but it means any advice you find should be checked against the current version rather than trusted on its face.

My industry is restricted. Is a Hong Kong company a way around it?

Generally no. A Hong Kong holding company is still a foreign investor for negative-list purposes. It can be useful for other reasons — treaty withholding rates on dividends, familiar company law, easier banking — but it does not unlock a restricted sector.