China parliament okays foreign investment law

Remigio Civitarese
Marzo 17, 2019

China's parliament approved a new foreign investment law on Friday that promises to create a transparent environment for foreign firms as China and the United States work to end a trade war, Reuters reports.

The law on equity joint ventures was put into effect in 1979, soon after the country started to implement the reform and opening up policy.

Jacob Parker, Beijing-based vice president at the US-China Business Council, welcomed the "positive language" in the bill but said "real investment on the ground will depend on how narrowly tailored those negative lists are going forward".

But, he added, the changes "only address a small slice of the overall set of concerns our members have about the uneven playing field foreign companies encounter in China". Foreign investment has become an important driver of China's economic and social development.

"It will be New to China", he said at an event in the White house. Although the foreign investment management mechanism has evolved rapidly in recent years, there are still many changes to go both in legislation and in practice.' The research was produced in connection with an upcoming Linklaters report that highlights several key trends that should be viewed as guidelines for success by worldwide companies, investors and brokers seeking to complete Chinese inbound M&A deals.

Aside from foreign investors, local businesses will benefit from the law, Xinhua reported.

Beijing has promised that a new foreign investment law will introduce measures to better protect overseas companies operating in China. "We have to prepare more and we have reserved policy room (to address uncertainties)", Li told reporters at a news conference on Friday at the conclusion of the annual parliament meeting.

This has dispelled the concerns of foreign enterprises on the exclusion of their products from government procurement. The level of inbound M&A, which stood at a record US$56 billion in 2018, is projected to grow still further as the new Foreign Investment Law, signed on 15 March 2019, kicks in on 1 January 2020.

Al Jazeera's Adrian Brown reports from the Chinese capital. "It is a full testament to China's determination and confidence in opening wider to the outside world and promoting foreign investment in the new era".

The legislation aims to address long-running grievances from foreign businesses, but the U.S. and European chambers of commerce have voiced concerns that they were not given enough time to give their input.

The American Chamber of Commerce in China, which represents about 900 USA companies, said this week that the law was being pushed through without "extensive consultation and input" from foreign businesses in the country. In such cases, the state will be ordered to offer compensation to ensure that no unfair treatment occurs. Industries that are not on the list will be fully open, with domestic and foreign firms enjoying the same treatment.

In a survey conducted in November and December for the American Chamber of Commerce in China, a third of companies who responded said they were limiting their investments in China because of concerns about intellectual property theft and forced tech transfers.

Altre relazioniGrafFiotech

Discuti questo articolo

Segui i nostri GIORNALE