China's Foreign Investment Law to be a 'fundamental law’
The new Foreign Investment Law, which has unified provisions for the entry, promotion, protection, and management of foreign investment, will play a leading role as an overarching law in the field of foreign investment, according to an explanatory document on the draft available to the press Friday.
"The Foreign Investment Law is a comprehensive and fundamental set of legal standards for foreign investment activities in China under new circumstances," said Wang Chen, vice chairman of the National People's Congress (NPC) Standing Committee, to the deputies attending an NPC plenary session.
Highlights of the new law
Besides for general principles and supplementary provisions, the new law draft contains four main chapters: Promotion, protection, management and legal responsibility of foreign investment.
In addition to the negative list, which has been implemented for several years, the new law addressed other key concerns of foreign investors, such as intellectual property rights (IPRs) protection and market access management.
The state shall protect the IPRs of foreign investors and foreign invested enterprises, and encourage technological cooperation based on the principles of voluntary and commercial norms, according to Article 22.
Article 22 also forbids compulsory technology transfers by the administration and its staff.
Market access and exit conditions must not be set and the normal production and operational activities of foreign invested enterprises must not be interfered with, said Article 23.
Principles of the new Foreign Investment Law
The enactment of the Foreign Investment Law clearly show China's will and determination to follow through with reform and opening-up, the explanatory document said.
As it is the top concern of many investors, the law ensures equal treatment. One of the principles of the law is to ensure that Chinese and foreign capital compete on a level playing field, under the same national treatment, management and oversight etc.
The law is to establish a basic institutional framework and fundamental rules in the field, putting up pillars that will support China's foreign investment legal system in the new era.
In addition, the new law links up with international economic and trade rules and the world-class business environment.
The history of China's foreign investment regulation
Foreign investors came to China 40 years ago. The related regulation was launched as early as 1979 and has been going through amendments since then.
The new Foreign Investment Law will replace three existing laws on foreign investment, namely the laws on Chinese-Foreign Equity Joint Ventures, Chinese-Foreign Contractual Joint Ventures and Wholly Foreign-Owned Enterprises.
As the document said, the three laws are no longer able to meet the needs in the new era.
Therefore, China started planning a new law in 2015 and the current draft has gone through two readings by the NPC Standing Committee so far.