OREANDA-NEWS. November 20, 2014. China moved closer to opening up key industries to overseas investors with its top economic planning agency floating a plan to ease restrictions on foreign ownership of sectors including steel and oil refining.

The National Development and Reform Commission yesterday called for public comment on the restrictive foreign investment guidelines. The policy draft no longer limits foreign investment in industries identified as having overcapacity such as steel, oil refining and ethylene production, according to the official Xinhua News Agency.
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Relaxing the rules would follow moves by the government this year to open up state-owned enterprises to private capital. It may also mean the country, the world’s biggest steel market and the No. 2 oil buyer, is closer to ending the nine-year-old ban on foreign takeovers of steelmakers.

“China needs foreign investment to help its industry upgrades at a time of loosening control in state-owned enterprises,” said Zhou Xizeng, who helps oversee 100 billion yuan (USD16 billion) worth of assets at Citic Securities Co. “It’s an irresistible trend.”

The revised guidelines would reduce the number of industries subject to foreign investment restrictions to 35 from 79, according to Xinhua. The number of sectors in which Chinese investors must have majority-control would also drop to 32 from 44, it said.

The changes are designed to encourage the creation of joint ventures or other forms of cooperation in oil and gas exploration, without giving a clear share-holding threshold, according to the draft on the NDRC’s website.

Overseas Complaints

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About 60 percent of foreign-based companies said in a survey released on Sept. 2 by the American Chamber of Commerce that China has become a less welcoming place to do business, up from 41 percent who said the same thing at the end of 2013. China’s recent emphasis on anti-monopoly regulation comes on top of concerns about market access, licensing and intellectual-property rights, chamber Chairman Greg Gilligan said at the time.

Easing the rules may also help China address crippling overcapacity in the steel and oil refining industries via better technology and higher-value products.