China’s negative lists suggest foreign-owned
academic vocational training institutions in FTZs may be
possible
(Information as at 6 July 2020)
On 23 June 2020, the Chinese
National Development and Reform Commission (NDRC) and Ministry of Commerce
(MOFCOM) jointly published the Special Administrative Measures on Access to
Foreign Investment (Negative List) (2020 edition) [1]and the Pilot Free Trade
Zone Special Administrative Measures on Access to Foreign Investment (Negative
List) (2020 edition) [2]. Both lists will take effect from 23 July 2020.
China’s foreign investment
‘negative list’ refers to a list of prohibited or restricted industries for
foreign investment. The Chinese
Government has been gradually reducing the number of restricted areas in recent
years as a part of its commitment to the further “opening up” of China’s
markets to international trade and investment.
A notable change in this
year’s negative list for pilot Free Trade Zones (FTZs) is that foreign academic
vocational education institutions are explicitly excluded from the broad
prohibition on foreign education providers independently setting up
institutions that mainly enroll Chinese citizens. This suggests foreign VET institutions will
be allowed to independently (i.e. without a Chinese partner) set up
institutions to deliver academic vocational education and training in FTZs as
the measures are implemented from July 2020.
In the 2019 negative list for
pilot FTZs, the only exception to this prohibition was for non-academic
vocational institutions (such as those providing corporate training and other
non-award courses, the first of which was set up by PricewaterhouseCoopers in
the Shanghai pilot FTZ in 2017[3]). The 2020 negative list extends this
exception to academic vocational institutions.
This shift aligns with some
of China’s recent development agendas including the master plan published by
the Central Committee of the Communist Party of China and the State Council on
1 June 2020 to develop Hainan Province into a Free Trade Port (FTP). [4]
The long-term plan states that high-level (usually referring to well-ranked
universities) overseas universities and vocational colleges in agriculture,
medicine and medical sciences will be allowed to independently run institutes
in Hainan and set up international schools. In addition, the plan encourages
key Chinese higher institutions to invite foreign counterparts to set up joint
institutes with independent legal entity status in Hainan.
Pilot FTZs were first
announced in 2013 to be used as a testing ground for new policies and reforms
aimed at boosting international trade. A range of policies have been
implemented in pilot FTZs to attract foreign businesses and professionals such
as streamlined approval processes and tax benefits.
As of July 2020, China has
set up pilot FTZs in eighteen provinces:
September 2013: Shanghai
April 2015: Guangdong, Tianjin, Fujian
March 2017: Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan,
Shaanxi
April 2018: Hainan (entire province)
August 2019: Shandong, Jiangsu, Guangxi, Hebei, Yunnan,
Heilongjiang
[4] People’s Republic of China,
Central Committee of the Communist Party of China and the State Council of
China, “中共中央 国务院印发海南自由贸易港建设总体方案) (unofficial translation:
The Central Committee of the Communist Party of China and the State Council
issues the overall plan for the construction of Hainan Free Trade Port), 1 June
2020, http://www.gov.cn/zhengce/2020-06/01/content_5516608.htm