On December 27, 2017, the State Council promulgated the Decision on the Provisional Adjustment of Administrative Regulations, State Council Documents, and Departmental Regulations Approved by the State Council in Pilot Free Trade Zones (the “Decision”), and requested that relevant departments of the State Council and the people’s governments of Shanghai Municipality, Guangdong, Tianjin, Fujian, Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, and Shaanxi to make timely corresponding adjustments to rules and regulatory documents formulated by their departments, provinces or municipalities according to the adjustments under this Decision in order to set up an administrative system that is appropriate to the pilot requirements.
1. Adjust the ship registration system and suspend the application of Article 1, Paragraph 1 of the Regulations of the People’s Republic of China on Vessel Registration and Article 13 of the Regulations of the People’s Republic of China Governing Inspection of Vessels and Offshore Installations in free trade zones. Relevant administrative measures will be formulated by the transportation department of the State Council to accelerate the innovation of the international vessel registration system and gradually open up vessel-level access on a reciprocity basis.
2. Adjust the printing industry administration system, suspend the application of Article 14 of the Regulations on the Administration of the Printing Industry in free trade zones and allow foreign-funded enterprises to engage in printing other printed materials.
3. Adjust the system for foreign investment in the civil aviation industry and suspend the application of Article 4, Paragraph 1 and Article 6, Paragraph 4 of the Regulations on Foreign Investment in the Civil Aviation Industry in the free trade zone, thereby temporarily allowing foreign investors to, in the form of sole proprietorships, invest and establish air transport sales agencies, air cargo warehousing, ground services, aviation food, and parking lot projects. The restriction for the controlling shares of a general-purpose aircraft maintenance operator invested by foreign investors to be a Chinese party is relaxed; and there is no longer a requirement for a foreign-invested aircraft maintenance operator to contract business in the international maintenance market.
4. Adjust the certification and accreditation system and suspend the application of Article 11, Paragraph 1 of the Regulations of the People’s Republic of China on Certification and Accreditation in free trade zones, thereby temporarily canceling the special requirement for foreign-invested enterprises to obtain qualifications from certification bodies.
5. Adjust the administrative system for entertainment venues and temporarily allow establishment of exclusively foreign-owned entertainment venues to provide services in pilot free trade zones.
6. Adjust the administrative system for Sino-foreign cooperative schools and suspend the application of Article 60 of the Regulations of the People’s Republic of China on Sino-foreign Cooperation in Running Schools. The education authority under the State Council shall, in conjunction with the relevant departments, formulate the relevant administrative measures for training institutions of an operational nature that are organized under Sino-foreign cooperation.
7. Adjust the administrative system for travel agencies to allow eligible Sino-foreign joint venture travel agencies registered in the pilot free trade zones to serve Mainland Chinese residents for outbound travel (excluding the Taiwan region).
8. Adjust the administrative system for direct selling and temporarily cancel the requirement for foreign investors to have more than three years of experience in conducting direct selling activities outside of China.
9. Adjust the operating limits of gas stations and temporarily lift the restriction on investment in gas stations under the Catalogue for the Guidance of Foreign-invested Industries (amended in 2017), allowing foreigners to engage in the construction and operation of gas stations in the form of sole proprietorship.
10. Suspend the application of Article 28 of the International Maritime Transportation Regulations of the People’s Republic of China, lift the restrictions on domestic water transportation, international maritime transportation, and shipping agency services under the Catalogue for Guidance of Foreign-invested Industries (amended in 2017) and allow the establishment of wholly foreign-owned international shipping, international vessel management, international marine cargo handling, international shipping container terminal and yard enterprises, and permit foreign companies to engage in the international shipping agency service business in the form of a joint venture or cooperative with the foreign shareholding limit also eased to 51%.
11. Temporarily cancel the restrictions on foreign companies engaging in the acquisition and wholesale of rice, wheat and corn.
12. Temporarily allow foreign companies to engage in the design, manufacture, and maintenance of general-purpose airplanes of 6-ton class with less than 9 seats in the form of sole proprietorships, and cancel the investment restrictions on the percentage of investment in the design and manufacture of civilian helicopters of 3 ton-class or above.
13. Temporarily cancel the requirement for the localization ratio of equipment for foreign-invested urban rail transportation projects to exceed 70%.
14. Temporarily allow foreign investors to invest in Internet access service locations.
15. Suspend the application of Article 34, Paragraph 1 of the Regulations of the People’s Republic of China on the Administration of Foreign-funded Banks and lift the requirement on the number of years operating a RMB business by the business organization of a foreign-funded bank.
16. Suspend the application of Articles 10, Paragraphs 1 and 2 and Article 11, Paragraph 2 of the Administrative Regulations on Commercial Performances to allow foreign investors and Taiwanese investors to set up wholly-owned performance brokerage agencies to provide services for provinces or municipalities under the direct jurisdiction of the State Council that have no pilot free trade zones.
Items 1 through 9 of this adjustment have been temporarily adjusted in the pilot free trade zones in Shanghai, Guangdong, Tianjin and Fujian, and those temporary adjustments are applicable to other pilot free trade zones. Items 10 through 16 apply to all pilot free trade zones. The Decision also stated that it may be amended in due course depending on the test results of for such reforms and liberalization measures in the pilot free trade zones. Enterprises that invest in free trade zones should thus continue to further observe developments on this matter.