Draft foreign investment law would tackle IP, market access issues

With the latest round of trade talks underway in Washington, China is taking actions to improve its investment environment for foreign investors, including moves to address long-debated issues – technology transfer and market access.

The Standing Committee of China's National People's Congress (NPC) on Tuesday started reviewing a new draft of the foreign investment law, the latest move to promote the country's opening-up initiative.

Once adopted, the unified law will replace three existing laws on Chinese-foreign equity joint ventures, non-equity joint ventures (or contractual joint ventures) and wholly-owned foreign enterprises.

The second version being reviewed on Tuesday and Wednesday would require the state to give national treatment to foreign investments outside China's negative list.

It would also stipulate that foreign-invested enterprises have the same access as domestic companies to China's pro-business policies, according to a draft available on the NPC Standing Committee's website, where it will be open to public opinion until February 24.

For the issue of IP protection, the draft bans forced technology transfer in foreign business practices, noting all transfers should be voluntary and based on only business considerations.

The new draft proposes that the state shall not expropriate or requisition foreign investment, except under particular circumstances and in the public interest.

"There is an urgent need for such a unified law to provide stronger legal protection for further expanding opening-up and better using foreign investment," China's justice minister Fu Zhenghu was quoted by Xinhua.

(With inputs from Xinhua)