On October 18th, during the opening ceremony of the third "Belt and Road" International Cooperation Summit, China announced that it will completely remove restrictions on foreign investment access in the manufacturing sector. In addition, China will establish a "Silk Road E-commerce" cooperation pilot zone, sign free trade agreements and investment protection agreements with more countries, and completely remove restrictions on foreign investment access in the manufacturing sector.
The Chinese government has always been committed to advancing high-level opening to the outside world. Since 2017, China has revised the negative list for foreign investment access for five consecutive years. The 2021 edition of the negative list for foreign investment access has been reduced to 31 items nationally and 27 items in the free trade zone. Restrictions on foreign equity ratios in industries such as seed industry, car and ship and aircraft manufacturing, securities, banking, insurance, and vocational training have been cancelled or relaxed, creating more market opportunities for foreign investors.
In the field of automobile manufacturing, China's initial intention to limit foreign capital shares was to protect the national automobile industry. In 1994, when China's automobile industry was still in its infancy, China introduced the "China Automotive Industry Policy", which stipulated that foreign car companies could form joint ventures with up to two domestic car companies, with foreign investment not exceeding 50% of the equity in the joint venture. However, with the gradual growth of Chinese car brands, China no longer relies on the passive development strategy of "exchanging market for technology", so in recent years, all restrictions on foreign equity ratios have been lifted.
In June 2017, the National Development and Reform Commission, in conjunction with the Ministry of Industry and Information Technology, issued the "Opinions on Improving the Management of Automotive Investment Projects", which stipulated that new Sino-foreign joint ventures producing pure electric passenger cars are no longer subject to the "two slots" limit.
Since the beginning of 2018, the new negative list for foreign investment access has been officially implemented. In the field of automobile manufacturing, compared to the 2020 version, the new list clearly cancels the restriction on foreign equity ratios in passenger car manufacturing and the restriction that one foreign investor can establish up to two joint ventures in China to produce the same type of vehicle.
Specific measures show that the automotive industry will implement a phased opening. In 2018, restrictions on foreign equity ratios in special vehicles and new energy vehicles were lifted; in 2020, restrictions on foreign equity ratios in commercial vehicles were lifted; and in 2022, restrictions on foreign equity ratios in passenger cars were lifted, and the restriction on not exceeding two joint ventures was also lifted.
To date, all restrictions on foreign equity ratios in the automotive industry have been completely lifted.
With the relaxation of joint venture equity policies in recent years, several joint ventures in the automotive industry have completed equity adjustments. Among them, BMW increased its stake in Brilliance BMW to 75% in 2018; in 2017, Volkswagen established a new energy joint venture with JAC Motors, making it Volkswagen's third joint venture in China. In December 2020, Volkswagen increased its share in JAC Volkswagen to 75% and took over management rights, officially renaming the joint venture to Volkswagen Automobile (Anhui) Co., Ltd.
Additionally, Tesla became the first foreign wholly-owned car manufacturer to enter the Chinese market. Today, the Tesla Shanghai Gigafactory has become an essential manufacturing base for Tesla globally. On September 6th of this year, the Tesla Shanghai Gigafactory completed its 2 millionth vehicle.
In the field of commercial vehicles, Sichuan Hyundai completed its share change as early as 2020, with Hyundai Motor Company holding 100% of the shares. It was renamed Hyundai Commercial Vehicles (China) Co., Ltd., becoming the first foreign wholly-owned commercial vehicle company in China.
