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 foreign-owned enterprises.
By the end of October 2018, a total of nearly 950,000 foreign-funded companies had registered in China, bringing in an accumulated investment of over US$2.1 trillion and performing as major driving forces in China’s economic and social development, notes by Chinadaily on Tuesday (01/29).
NPC Standing Committee said that the foreign investment law will be a basic law in that field, and its drafting is an important move in implementing the strategy of further opening-up made by the Communist Party of China Central Committee.
The drafting of the foreign investment law is also necessary to attract more foreign investment, protect foreign investors’ legitimate rights and interests, foster an environment favorable to doing business, as well as provide legal guarantee to opening-up at a higher level.
“It’s to better implement the report of the 19th National Congress of the Communist Party of China in 2017, the new draft further expanded the article on the system of pre-establishment national treatment plus a negative list,” said Chairman of the NPC Constitution and Law Committee Li Fei, on his presentation.
In addition to a clause requiring the State to give national treatment to foreign investments outside the negative list, it also stipulates that foreign-invested enterprises have equal access to favorable policies for enterprises.
In the new draft proposes that the state shall not expropriate or requisition foreign investment, except under particular circumstances and in the public interest. If the state expropriates or requisitions foreign investment, “due legal procedures must be followed while prompt, fair and reasonable compensation should be made.
So far, the new draft also includes regulations regarding antitrust examination on mergers and acquisitions by foreign businesses and penalties on failure to report their investment information to related authorities.
Meanwhile, Chairman of the NPC Standing Committee Li Zhanshu, said there was a consensus among the standing committee members on the significance and urgency of drafting the foreign investment law.
“The Committee members agreed that the content of the draft was basically mature and the draft demonstrated China’s resolute determination to open wider to the world. China will not close its door to the world; but will only become more and more open,” he said.
Ma Zheng, vice president of the China subsidiary of major agricultural commodities trader Cargill, believes the replacement of the three existing laws governing foreign investment with the unified one is of much significance, including for the company, with a more solid guarantee of protecting their legitimate rights and interests.
On Jan. 25, British multinational BT announced that it has become the first non-Chinese telecoms firm to get a nationwide operating license in China.
The permit will allow the company to contract directly with Chinese clients and bill them in Yuan, and enter into competition with domestic telecoms firms – state-owned China Mobile, China Telecom and China Unicom.
This is one example of the opening up of market access in China to foreign companies. The move encourages foreign investors to broaden their investment scope in the country.