China Opens Up Cross-Border Services Market with New Negative Lists for Market Access

China’s Ministry of Commerce released negative lists for cross-border services trade, clarifying restrictions for overseas companies selling services in China. This system aims to provide clarity, prevent arbitrary blocks, and facilitate market access expansion, aligning with WTO principles and setting the stage for future market opening in China.

China’s commerce regulator has released two new negative lists outlining services that overseas companies are prohibited or restricted from selling to China. The negative lists provide clarity for companies in a previously ambiguously regulated space, thus facilitating market participation and ensuring consistent implementation of the rules. At the same time, the lists relax restrictions in certain fields and lay the groundwork for future market access expansion in China’s cross-border services trade.

China’s Ministry of Commerce (MOFCOM) has released the country’s first-ever negative lists for China’s cross-border services trade, providing foreign companies with long-awaited clarity on which services can be sold to China.

The two negative lists, one applicable nationwide (the “national negative list”) and one applicable in China’s free trade zones (the “FTZ negative list”), stipulate the services that overseas companies are restricted from selling within China.

According to an explainer from MOFCOM, China previously implemented a so-called “positive list” system for China’s cross-border services trade. Under this system, overseas companies were permitted to sell certain services to China under various trade agreements with other countries. Services that were not included in these lists were regulated across different pieces of legislation, creating a somewhat confusing and inconsistent system.

While the new negative lists stipulate the fields that are restricted from participation by overseas companies, they are widely seen as a market access expansion, as they give the green light to companies to operate in all service fields not placed on the lists. This will also prevent local authorities from arbitrarily blocking the sale of services that are not included in the negative lists, a situation that has previously occurred where rules on market access were vague.

The cross-border service negative lists are significant not only because they remove ambiguity for overseas companies, but also because they form part of a new system governing China’s cross-border services trade that clears the path to further market opening in the future – what MOFCOM calls a “tiered opening system (梯度开放体系)”.

MOFCOM’s definition of “cross-border service trade” encompasses three types of cross-border activity: cross-border delivery, overseas consumption, and movement of natural persons. This definition aligns with the WTO’s General Agreement on Trade in Services.

This article is republished from China Briefing. Read the rest of the original article.

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