On November 7, China issued a new 28-page guide of its domestic industries for foreign investors, which is to replace the older version issued in 2004. The guide, which is to take effect as of December 1, enables foreign investors to see which industries are open to them and which are off limit or restricted. Interestingly, however, the steel industry, is neither mentioned among the allowed industries nor among the banned or restricted ones.
Currently, efforts are being made to shift the focus of China's economic development from quantity to quality. These efforts, in addition to the state's principle of upholding the country's opening-up policy and the safeguarding of national economic security, are emphasized through out the guide.
The guide has been jointly issued by China's National Development and Reform Commission (NDRC) and the Ministry of Commerce. On the whole, foreign investors are encouraged to join efforts to promote recycling, clean production, renewable energy utilization and ecological-environmental production. Meanwhile, the exploitation of important and non-renewable mineral resources, as well as high energy consumption and high-pollution projects, are prohibited or restricted.
In order to balance its international trade surplus, China intends to curb purely export-oriented industries which have been the cause of anger and protective measures among some important countries targeted by China's export commodities.
Furthermore, manufacturing industries are partially opened up to foreign investors, but mainly in the areas of hi-tech, equipment manufacturing and new materials, and excluding traditional industries in which China has already developed technology and strong productivity.
As a major manufacturing industry, steelmaking is not mentioned anywhere in the guide. The most likely reason for this is the reference in the document to restrictions on foreign investors from entering "strategic and sensitive" industries relating to national economic security. However, the document does not specify the industries in question.
In the NDRC's "Development strategies of the iron and steel industry" issued on July 8, 2005, there are strict requirements made of foreign investors who want to directly invest in China's steelmaking industry. One of the most important clauses is that, in principle, foreign investors are banned from becoming majority shareholders of the target enterprises. In addition, given the current restructuring and M&A trend among domestic steelmakers, it is reasonable to deduce that the steelmaking industry is among the so-called "strategic and sensitive" industries. In other words, steelmaking is a special industry which is not open to foreign investors.