“Can a foreigner own this business in China?” sounds like a yes-or-no question. In practice, you need to check more than one list.
China’s foreign investment negative list tells you which industries are restricted or prohibited for foreign investors. A separate market access list tells all businesses, foreign and Chinese, which activities are prohibited or require permission. Hainan then adds its own Free Trade Port rules.
Keeping those layers separate prevents two common mistakes: assuming an open sector needs no licence, or assuming a licensed sector is closed to foreign ownership.
The national foreign investment negative list
The Special Administrative Measures for Foreign Investment Access (2024 Edition) took effect on 1 November 2024. It reduced the national list from 31 measures to 29 and removed the remaining foreign-investment access restrictions in manufacturing.
The basic rule is:
- outside the list, foreign investors receive pre-establishment national treatment for market access;
- in a restricted activity, the investor must satisfy the listed ownership, control or management conditions; and
- in a prohibited activity, foreign investment is not permitted.
This system makes 100% foreign ownership possible in many ordinary service, trading, technology and manufacturing businesses. It does not remove sector licences, security review or other laws that apply to the activity.
Hainan has a separate foreign investment list
The Hainan Free Trade Port Foreign Investment Negative List (2020 Edition) applies across Hainan Island and has been in force since 1 February 2021.
The year in its title makes it look outdated, but no replacement Hainan list has been identified in the current official policy materials reviewed for this article. Recent Hainan investment guidance continues to refer to the Free Trade Port’s special list. Until an official replacement is issued, use the published Hainan list together with current sector rules.
Hainan’s regime provides wider access in selected areas, but it should be checked item by item. Do not rely on the claim that Hainan is “fully open”. Education, media, telecom, healthcare and other regulated fields require close analysis of ownership and licensing conditions.
The Market Access Negative List is different
The Market Access Negative List (2025 Edition) applies to domestic and foreign market participants. It identifies activities that are prohibited or require government permission.
For example, foreign ownership of a proposed activity may be allowed while the activity itself still needs a food, travel, transport, education, medical or telecom permit. Clearing the foreign investment list answers the ownership question. It does not answer the operating-licence question.
A practical three-step check
Step 1: Describe the revenue-generating activity
Do not begin with a broad label such as “internet company”. Write down what the company will sell, who will pay it, where the users are and whether the company will handle content, data, payments or regulated goods.
Step 2: Check foreign ownership
Compare the activity with the national list and, if locating in Hainan, the Hainan Free Trade Port list. Note any equity cap, Chinese-control requirement, senior-management condition or prohibition.
Step 3: Check general and sector licensing
Review the Market Access Negative List and the regulations administered by the relevant industry authority. A business scope on the licence is not a substitute for an operating permit.
What 100% foreign ownership really means
If an activity is outside the applicable foreign-investment restrictions, a foreign individual or overseas company can often own all the equity of the Chinese company.
That ownership does not exempt the company from Chinese company law, tax, employment, cybersecurity, data, foreign-exchange or licensing requirements. It simply means a Chinese shareholder is not required as a condition of foreign investment access.
When a joint venture may still make sense
A Chinese partner can be legally required in a restricted activity, but joint ventures are also used for commercial reasons: local distribution, licences, customer relationships, assets or industry knowledge.
If the sector is open, the decision should be based on the partner’s contribution and the shareholders’ agreement, not on an outdated belief that every foreign business needs a local nominee.
Other reviews that can still apply
Some investments may require national security review, merger-control filing or project approval even if the sector is not prohibited. These reviews are driven by the transaction, activity, scale and control involved.
For an ordinary new consulting or trading company, they are rarely the first obstacle. For acquisitions, sensitive technology, important infrastructure or strategic sectors, they should be considered before signing the deal.
Questions to ask before filing
- What exactly will the company sell?
- Is that activity restricted for foreign investment?
- Does Hainan provide a different access rule?
- Does the activity require an operating permit?
- Can the proposed ownership and management satisfy the listed conditions?
- Is project approval, security review or merger filing relevant?
A short written access review at the beginning is much cheaper than changing shareholders and contracts after registration.
Related reading
- Can foreigners own 100% of a company in China?
- How to set up a company in Hainan Free Trade Port
- How to register a company in China as a foreigner
Official sources
- Foreign Investment Negative List (2024 Edition)
- Hainan Free Trade Port Foreign Investment Negative List (2020 Edition)
- Market Access Negative List (2025 Edition)
- Regulations on Foreign Investment in the Hainan Free Trade Port
Negative lists and licensing rules change. Confirm the applicable text and industry requirements before committing capital or signing a lease.
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