China to open more industries to foreign investment but rare earths remain protected

China to open more industries to foreign investment but rare earths remain protected

China’s 2017 “negative list” approach to foreign investment begins today. The list outlines which industries are restricted or closed to

Photo: Shutterstock

Photo: Shutterstock

China’s 2017 “negative list” approach to foreign investment begins today. The list outlines which industries are restricted or closed to foreign investment, opening the door to the rest of the economy. The updated measure removes 27 restrictions from the previous list and frees some industries, like aviation manufacturing and banking services, from tight state control.

The revised guidelines are intended to alleviate the trend of decreasing foreign investment into China (a drop of nearly 40% since 2013).

Not all sectors are fair game—the refining and separation of rare earth minerals is one crucial area which Beijing will continue to shield from foreign investors.

China controls about 90% of the world’s rare earth elements production—essential components in high-tech items such as smartphones, computers and weapons systems.

China has used its rare earths hegemony to its advantage. In 2010, Beijing implemented an embargo on rare earth shipments to Japan because of a territorial dispute. China hopes to preserve its monopoly status; it is a card to play during future negotiations over key issues with countries like the US, India and Japan.