China adopts new foreign investment law to level playing field
By
Wang Cong
China’s
top legislature on March 15 passed a highly anticipated new foreign investment
law, paving the way for an overhaul of the country’s regulatory system for
foreign investment that would offer investors greater access and better
protection.
The
13th National People’s Congress (NPC) voted to adopt the draft foreign
investment law, in one of the most important legislative achievements from this
year’s NPC annual session, which concluded on March 15.
Chinese
President Xi Jinping signed a presidential decree to promulgate the law.
The
new law would replace three existing laws on various types of foreign
investment and become the first unified legal standard for foreign investment
activities in the country.
The
law enjoyed overwhelming support at the NPC, with 2,929 deputies voting for the
passage of the law, eight against and eight abstentions. The law will come into
effect on 1 January 2020.
After
deliberation on the draft law, lawmakers made seven amendments, including
adding a clause to prohibit administrative agencies and their employees from
revealing commercial secretes, according to the Beijing News.
The
amendments also included stronger language on protecting foreign firms’
intellectual property rights (IPR), replacing a phrase about encouraging
technology cooperation based on a volunteering principle and commercial rules,
with one about taking strict legal actions against IPR infringement.
Consisting
of 41 articles in 6 different parts, the law provides legal basis for various
aspects of foreign investments from classification to management. Overall the
law offers foreign investors equal treatment, greater access, and better legal
protection.
“[The
law] provides more comprehensive and equal treatment to foreign companies and
is very modernized and also fitting for our country's development,” Wong
Yuk-shan, an NPC deputy and president of the Opening University of Hong Kong
who voted for the law, told the Global
Times on March 15.
“The
law would improve the transparency in all aspects for foreign companies and
will attract more [foreign investors] to China,” said Ian Fok Chun-wan, an NPC
deputy from Hong Kong and CEO of the Fok Ying Tung Group.
Actions
to follow
That
is expected to be followed by amended rules and regulations from the State
Council, China’s cabinet, for implementation of the new law, said Kong
Qingjiang, vice dean of the School of International Law at China University of
Political Science and Law.
“It
is basic, which means it is not very specific and would likely require the
State Council to set what’s known as the administrative regulations,” he said.
The
State Council will introduce a series of matching regulations and normative
documents to protect foreign companies’ rights and interests under the new law,
Chinese Premier Li Keqiang said at a press conference on March 15, after the
conclusion of the NPC session.
The
State Council will release a shortened negative list for foreign investments,
which means more sectors will be open to foreign companies, and propose
revisions to laws governing IPR and set up a punitive mechanism to better
protect foreign firms’ IPR.
“In
a word, China will further open up and China’s opening-up measures will not
come on one time basis but will be introduced over time,” Li said.
Among
the regulations, the State Council would likely draft new rules regarding the
national security review of foreign investments and a negative list for foreign
investors, Kong said.
The
new changes made to the draft law also included a part that gives the State
Council the power to draft specific rules for the implementation of the new law
to ensure a proper transition period for foreign companies already operating in
the country, according to the Beijing
News.
But,
Kong said, all the rules and regulations must be in line with the new law,
which also underscored equal opportunity for foreign companies to government
procurement and better services from all levels of governments to help foreign
companies.
New
amendments to the draft law further clarified those parts by adding services to
government procurement of foreign goods, and adding streamlining administrative
process and improving efficiency, to improve better services for foreign
investors.
Source:
Global Times/People’s Daily
(On the
afternoon of March 10, the Shanghai delegation held a group meeting to review
the draft foreign investment law during the two sessions.
Photo: People’s
Daily Online)
China adopts new foreign investment law to level playing field
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