Foreign Investment Negative List (Automotive Sector)

The Foreign Investment Access Negative List (Automotive Sector) refers to the special administrative measures explicitly outlined by the state to restrict or prohibit foreign investment in the automotive industry. Automotive sectors outside this list are administered under the principle of equal treatment for both domestic and foreign investments. In September 2024, foreign investment restrictions in the manufacturing sector were completely eliminated, marking a new phase of full liberalisation for foreign investment access in China's automotive industry.

Policy Evolution

The liberalisation of foreign investment in China's automotive industry has followed a structured "timetable" and "roadmap". In 2020, China removed the foreign equity cap on commercial vehicle manufacturing. By 2022, the foreign equity limit on passenger vehicle manufacturing was also lifted, alongside the removal of the restriction limiting a single foreign investor to a maximum of two joint ventures producing the same category of complete vehicles nationwide.

This wave of liberalisation is closely tied to the historical background of vehicle manufacturing joint ventures in China. Since Beijing Jeep was established in 1984 as China's first complete vehicle joint venture, foreign carmakers seeking localised production in the country were required to set up no more than two joint ventures with domestic automakers, with foreign equity capped at 50%. This policy played an instrumental role in spearheading the development of China's automotive industry in the early era of reform and opening-up.

Latest Update: 2024 Negative List

On 8 September 2024, the National Development and Reform Commission and the Ministry of Commerce published the "Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Edition)", effective 1 November 2024. This edition pruned restrictive items from 31 in the 2021 version down to 29, effectively eliminating all foreign investment access restrictions across the manufacturing sector.

An official from the Planning Department of the Ministry of Industry and Information Technology stated that the ministry will ensure foreign-invested enterprises receive national treatment in areas such as resource allocation, licensing, standardisation, and government procurement, while supporting their integration into upstream and downstream supply chain collaborations.

Shift in Regulatory Oversight

With the continuous narrowing of the negative list, foreign investment administration in the automotive sector has fully transitioned from the conventional "approval-based regime" to a "filing-based system". Projects stipulated under the "Catalogue of Investment Projects Approved by the Government (2016 Edition)"—including newly established Sino-foreign joint-venture passenger car manufacturing facilities, new pure electric passenger vehicle production plants (including existing carmakers expanding across segments to produce pure electric passenger vehicles), and other automotive investment projects previously subject to provincial government approvals—no longer require formal approval and are now managed via administrative record-filing.

Key Focus Areas for Encouraged Foreign Investment

Alongside the removal of market access barriers, the state actively channels foreign capital into high-tech sectors such as intelligent connected vehicles via the "Catalogue of Encouraged Industries for Foreign Investment". The updated catalogue released in December 2025 includes core smart vehicle components and key technologies—such as automotive-grade semiconductors, domain controllers, and in-vehicle operating systems—as well as the manufacturing of Level 3 to Level 5 autonomous driving hardware and core assemblies within the scope of encouraged foreign investment.

Market Impact and Milestones

Policy liberalisation has delivered tangible milestones. Tesla commenced construction of its Shanghai Gigafactory in 2019, becoming the first foreign automaker to establish a wholly foreign-owned car manufacturing operation in China. Under the vehicle scrappage and fleet renewal scheme, new vehicles from foreign brands captured an estimated 35% share, driving robust sales growth for international automakers.