ECONOMY ListPage

By Dai Qi

China's new version of negative lists on a national level for the investment and free trade areas covers a wide range consisting of finance, transportation, business and trade, logistics, professional services, manufacturing, infrastructure, energy, resources and agriculture, etc.

Head of the School of Law of University of Glasgow, Iain Gerard MacNeil, said to China Fortune Media last Thursday that among those industries, finance was expected to be most favoured by foreign investors.

Iain Gerard MacNeil, head of the School of Law of University of Glasgow, spoke at the Fortune Seminar held by the China Fortune Media Group last Thursday. (Photo/China Fortune Media Group)

"Finance is more liberalised for the whole range. Others I am not so sure about them, because in some of the other industries like the basic industries, I think it would be more difficult to challenge the Chinese companies that are already in place", he said.

He added that it was hard to predict other choices because they would be driven to a large extent by the decisions that are made in China about liberalisation.

MacNeil has been a member of the International Securities Regulation Committee of the International Law Association (ILA) since 2006 and was an invited participant by the Bank of England Annual Seminars on Financial Regulation between 2013 and 2017. He is also a professor doing research on financial regulations and innovations as well as cross-border mergers and acquisition (M&A) cases, among others.

The industries covered by the new version of the negative list involve many Chinese state-owned enterprises, to which the government has attempted to attract foreign investment.

In 2017, the State Council issued some policies to encourage foreign investors participating in China's mixed ownership reforms with regards to state-owned enterprises.

This June, another document was released to further ensure institutional transparency for equity transfer in those enterprises and to create a fair environment for qualified foreign investors.

China's state-owned enterprises are ready for a handshake with foreign investors. What reaction will they receive from them? How can they enhance attractiveness?

"I think some of the keys to that would be for the management. That's always going to be difficult because of the particular shareholdings. However, if it were clear that the government was going to act mostly as a shareholder rather than the government, it would be much easier. As a shareholder, you would act the same way as the other shareholders. I think if the foreign investors can see that, they would be more comfortable", said MacNeil.

At the general level, MacNeil holds that competition should be open and fair.

"I think there is a sense that probably the SOEs enjoy some privileges. You might think that would be attractive to international investors. I think they are more comfortable with strong competition rather than privileges", said MacNeil.

MacNeil thinks in that way, foreign investors will have more certainty as how things are going to work, "because if you have a rating that is not so strong, someone has privileges, things will become uncertain".