China's economic planning agency has published a new list of industries that it would encourage, restrict or ban, a blueprint that could have a far reaching impact on investment activity China over the coming years.

The list will serve as a guideline for Chinese regulators in making policies on tax, bank credit, land and trade, and will also be a reference for Beijing to decide which foreign investors are welcomed.

In a statement summarizing the new guidelines, the National Development and Reform Commission, said that the list makes changes to the previous version, published in December 2005, to reflect technological change and industrial development.

The NDRC said that "Some steel, non ferrous and construction material products have seen serious over capacity, for which we will no longer encourage ordinary capacity in these areas."

For projects in sectors listed as to be encouraged, investors often find it easy to obtain approval from the government, in addition to cheap bank loans and land as well as preferential tax treatment.

But for industries labeled as restricted or to beeliminated, investors will find it hard to get governmental approval for new projects and to maintain operation. For example, such projects would be the first to be cut off at times when electricity is restricted because of power shortages. The updated list has added new energy, inner city railway transport equipment and public security devices into the encouraged category.

Automatic control systems for vehicles, high speed precision bearings as well as key parts for new energy vehicles will also be encouraged.

• [Editor:editor]