Encouraged Industry Catalogue

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As one of the key tools used by the People's Republic of China (PRC) government to direct foreign investment into mainland China, the Encouraged Industry Catalogue is significant in international trade with mainland China. It classifies various industries into the four groups which are Encouraged, Permitted, Restricted and Prohibited which has subsequent effects on foreign firms wishing to operate in such sectors.

A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control.

Mainland China geopolitical area under the jurisdiction of the Peoples Republic of China excluding Special Administrative Regions

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International trade exchange of capital, goods, and services across international borders or territories

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Encouraged industries generally receive favourable tax treatment whilst those in the Permitted category are treated on a quite neutral basis. If an industry is restricted, foreign investment is usually limited to a minority shareholding in a joint venture whilst Prohibited industries cannot have any form of foreign investment at all.

A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent.

A Joint Venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access a new market, particularly emerging markets; to gain scale efficiencies by combining assets and operations; to share risk for major investments or projects; or to access skills and capabilities.

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