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When is a loosening of foreign investment rules not really a loosening of foreign investment rules? When China’s doing it in the face of a brewing trade war. The country’s latest so-called “negative list” issued last week, which comprises a group of industries where foreign businesses are either prohibited from investing or restricted to joint ventures with a degree of Chinese control, boasts an eye-catching headline number: The number of sectors is down to 48, from 63 last year and 120 back in 2011. In theory, that means large swathes of the Chinese economy that were once closed off to overseas competition are finally opening up. In practice – as we argued when President Xi Jinping first promised the changes back in April – the difference is mostly cosmetic.

The core list of industries where offshore investment is altogether prohibited is more or less unchanged from last year. The most striking alteration is likely to provoke guffaws in foreign capitals: International arms ma...

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