More than 50 rules and restrictions governing foreign investment in Shanghai's pilot free trade zone have been lifted in a bid to support its continued growth and development, a senior official said yesterday.

The latest version of the so-called "negative list," which is effective immediately, contains just 139 limitations and conditions for overseas investment, down from 190 previously.

Among the key changes are the removal of 14 restrictions on such things as qualification requirements and maximum equity ratios for foreign partners, as well as the relaxation of investment controls in 19 areas, including manufacturing, property and maritime services.

"The greater openness will enable the zone to give full play to its role as a testing ground for China (FXI, quote) as it undergoes a process of industrial restructuring, and aid the cultivation of competitive advantages in international economic cooperation," Dai Haibo, deputy director of the zone's management committee, told a press conference yesterday.

A major change in the financial sector is that foreign investors are no longer excluded from finance and trust companies or currency brokerages.

The new list also allows more room for foreign participation in the property sector by permitting investment in the construction and operation of large-scale wholesale markets for agriculture products.

Similarly, land development projects, which formerly were required to be joint ventures, can now be wholly foreign-funded, while overseas investment in real estate agencies is also permitted.

With regard to medical institutions, both the minimum investment of 20 million yuan (US$3.2 million) and maximum operation period of 20 years have been removed.

Song Wei, president of the Shanghai Fine Medical Club, said the relaxed rules will encourage senior doctors to open private clinics in the zone as funding will be more readily available.

Several of the list changes relate to high-end manufacturing. For instance, wholly foreign-funded investments are now allowed in the manufacture of aircraft engine parts, and in the design of cruise ships and yachts.

"The revisions to the list are in line with China's strategy to restructure its economic growth model by upgrading the manufacturing sector and further opening up its service sector," said Lin Caiyi, chief economist with Guotai Junan Securities.

Introduced last year after the launch of the free trade zone, the negative list was designed to reduce the red tape surrounding foreign investment. However, the original version has been criticized for not doing enough to liberalize the market.

While the 2014 version has 51 fewer items, critics said yesterday that it is still too restrictive, suggesting the majority of the deletions were due to the merging of related rules, rather than the elimination of actual barriers.

Several of the deletions from the list were also futile, as the issues to which they related are already adequately covered by law.

For instance, the updated list no longer contains a ban on foreign investment in gambling or pornography. But as both of these activities are illegal in China anyway, the lifting of the restriction within the FTZ is of no significance whatsoever.

By the end of last month, 1,245 foreign companies with a combined registered capital of US$7.3 billion have been attracted to the zone.

More than 90 percent of them operate in sectors not covered by the list and were therefore allowed to register via an on-the-spot filing system, rather than having to wait eight working days under the approval system.

Content Curiosity of China.org.cn