New Draft of Foreign Investment Law
Source: Beijing Docvit Law Firm Time: 2019-02-15 20:17:29 Author: Docvit
A draft of the proposed legislation, Foreign Investment Law (the “Draft”), was presented at a meeting of the Standing Committee of the National People's Congress (NPC) on 23 December 2018. China's legislature is considering a new law governing foreign investment that will streamline existing rules and prevent the forced transfer of technology. The new "unified law" will replace three existing laws on Chinese and foreign equity joint ventures, non-equity joint ventures and wholly foreign-owned enterprise.
The draft aims to promote foreign investment, investment protection, and investment management. The draft clearly defines the main tone of opening up and actively utilizing foreign capital, strengthens the promotion and protection of foreign investment, and strives to release a new round of high-level opening to the outside world.
1. Guarantee equal treatment of domestic and foreign-funded enterprises
The issue of equal treatment has always been a long-term appeal of foreign-invested enterprises. Ensuring equal treatment of domestic and foreign-funded enterprises is reflected in the draft provisions.
Article 9 of the draft stipulates that, except as otherwise stipulated by laws and administrative regulations, the policies of the state to support enterprise development are equally applicable to foreign-invested enterprises.
According to the draft, foreign-invested enterprises participate in the standardization work equally, and the formulation of standards should strengthen information disclosure and social supervision. In addition, the state guarantees that foreign-invested enterprises participate in government procurement activities fairly. Government procurement is treated equally according to the products produced by foreign-invested enterprises in China.
The Notice of the State Council on Several Measures for Expanding the Use of Foreign Capital for Opening to the Outside World, which was promulgated in 2017, will focus on promoting fair competition between domestic and foreign-funded enterprises, and proposes equal treatment of domestic and foreign-funded enterprises in terms of industrial policies, science and technology policies, and government procurement. It is welcomed by foreign-invested enterprises.
The draft raised a series of foreign investment policies in China into law, providing legal protection for foreign-invested enterprises to enjoy fair treatment, and helping to create stable, transparent and predictable investing environment, which are aimed to enhance foreign confidence in Chinese investment.
2. Incorporate policy measures to actively attract foreign investment into the law
Since the reform and opening up, China has attracted foreign investment based on its national conditions and has become the world's second largest investor. In practice, China has accumulated a series of experience in attracting foreign investment, including investment services, attracting investment. The industry and regional policies that encourage foreign investment, the draft foreign investment law insists on actively attracting foreign investment and fully absorbs these experience results.
The draft stipulates that the state establishes a sound foreign investment service system and provides consultation and services for foreign investors and foreign-invested enterprises in laws and regulations, policy measures, and investment project information.
The draft stipulates that the people's governments at all levels and their relevant departments shall further improve the level of foreign investment services in accordance with the principle of convenience, efficiency and transparency. The relevant competent authorities shall prepare and publish foreign investment guidelines to provide services and facilities for foreign investors and foreign-invested enterprises.
The draft also stipulates that the state shall, in accordance with the needs of opening up to the outside world, implement foreign investment pilot policies and measures in specific regions to promote foreign investment. The State Council may set up special economic zones to promote foreign investment and expand opening up.
3. Further simplifying foreign investment management
According to the draft, the approval and filing of foreign investment projects shall be implemented in accordance with relevant state regulations. Where a foreign investor invests in an industry or field that requires permission in accordance with the law, it shall go through relevant licensing procedures in compliance with the law. Except as otherwise provided by laws and administrative regulations, the relevant competent department shall, in accordance with the conditions and procedures consistent with domestic investment, review the application for permission of foreign investors.
From the perspective of investment management, the important idea of the draft foreign investment law is to unify the management of domestic and foreign investment in addition to the special access management measures stipulated in the negative list.
After the implementation of the Foreign Investment Law, the “three foreign laws” will be abolished, the examination and approval procedures for the establishment of foreign-invested enterprises will be ceased, and only the project management and industry licenses consistent with domestic and foreign investment will be retained, which will further enhance the convenience of foreign investment.
For the collection of foreign investment information, the draft is clear, the state establishes a foreign investment information reporting system, and the content and scope of the information report are determined according to the principle of necessity and strict control. Foreign investors or foreign-invested enterprises shall submit investment information to the competent commercial authorities through the enterprise registration system and the enterprise credit information publicity system. Investment information that can be obtained through departmental information sharing shall not be required to be submitted.
It is believed that the foreign-invested information is submitted through the unified system of domestic and foreign investment, which avoids redundant construction of information systems and long-term submission.
4. Strengthening the connection with international investment rules
A major feature of the draft is the emphasis on the protection of the legitimate rights and interests of foreign investment, including expropriation and compensation, intellectual property protection, and the free transfer of capital, profits, capital gains, etc. These are important elements of international investment agreements.
The draft makes clear provisions on strengthening the protection of foreign intellectual property rights, the constraints on the formulation of foreign-invested normative documents, the promotion of local government compliance, and the improvement of foreign-invested enterprises' complaints and rights protection mechanisms.
The inclusion of these contents in the draft Foreign Investment Law fully reflects the responsibility of China's foreign investment protection, which is conducive to China's better participation in the formulation of international investment rules, and further demonstrates its firm position in support of economic globalization.
May be interested
Series Product LineMore
Legal Health Index Report on National Insurance Industry (2015 - 2017) is compiled by Green Legal Global Alliance (GLGA), with the Beijing Docvit Law Firm as the professional support unit. Under the guidance of an external team of experts, it is one of the series of research topics in the legal health index report of capital market industry. In 2017, Green Legal Global Alliance (GLGA) successfully released its first research achievement of the series of research projects in the legal health index report on capital market industry, that is the Legal Health Index Report on Private Equity Industry. Report on Insurance Industry Legal Health Index is the second research result of this research topic.
Based on an in-depth study and research on the overall non-performing asset industry, Green Legal Global Alliance Research Institute and Beijing Docvit Law Firm jointly complied 2018 Blue Book of China's Non-Performing Assets with certain academic and public welfare, hoping to bring guidance to the industry and reflect the innovation of the non-performing asset industry itself.
Legal Health Index Report on Listed Companies among Central SOE (A-shares) is the first index report on the health development of listed companies among central SOE (A-shares) in the market with legal health-oriented and judging criteria. It is the first index report on listed companies among central SOE (A-shares) with public welfare and academic nature launched by a third party, and it is an innovative measure for researching and evaluating the listed companies among central enterprises (A-shares) as a new perspective.
Docvit News | Mr. XI Xiaohong, senior adviser of our firm, was invited to attend "CBLJ Forum 2019" and delivered a wonderful speech Docvit News | Director LIU Guangchao was employed as the instructor of the 11th "Sunshine Growth Program for Young Lawyers" of Beijing Lawyers Association Docvit News | A number of management leaders of our firm inspected the progress of a major project and expressed sympathy to the front-line lawyer team Docvit News | Beijing Docvit Law Firm Hong Kong Branch has obtained the recommendation letter from All China Lawyers Association and furthered the pace of internationalization
Achievements of Docvit | We managed to win the bid for the legal service institutional repository of China National Nuclear Corporation Achievements of Docvit | We managed to win the bidding for the alternative repository of legal services intermediary institution of China Petroleum & Chemical Sales Co., Ltd. Shanxi Branch Achievements of Docvit | We managed to enter into contracts with several institutions and would provide regular legal services for them. Achievements of Docvit | We managed to get shortlisted in the external non-litigious lawyer repository of China Chengtong Holdings Group Ltd.
With the launch of the "Fellow Program", Docvit hopes to unite with the like-minded lawyers of the country to build a career platform and realize their career dreams together. "Fellow Program I" aims to recruit partners, business partners and executive directors for the Docvit Branch in China.
"Fellow Program II" aims to recruit partners and lawyers for Docvit Headquarters and Beijing Office across the country and around the world to become what the industry, Docvit itself, market and clients want.
"Fellow Program III" aims to recruit partners for national branches of Docvit nationwide and globally. Docvit's national and global development blueprints require more partners to draw together, and let us work together to create a respectable law firm.
[08/31]Forum on Insurance & Insurance Asset Management Industries’ Innovation and Legal Health Development under the New Pattern of Financial Opening-up and Release Conference of Blue Book of Legal Health of China’s Insurance Industry 2018 (Index & Special Reports)At present, China’s financial open-up has entered a substantial promotion stage, and as an important link thereof, opening-up of insurance industry plays a unique role in financial opening-up. Under the new opening-up pattern of finance and insurance industry, and in the new situation of pan-asset management and integrated development, it has become an urgent topic to discuss and study how China’s insurance asset management institutions should grasp development opportunities, meet challenges head on, how to promote standardized transformation and sound development of the insurance and insurance asset management industries, and how to achieve innovation and high-quality development in compliance.
[08/17]Launch ceremony of DOCVIT bond default dispute resolution new product line and seminar on bond default disposal and bond market development under the new normal of economyHalfway through 2019, how will the bond market perform in the second half of the year? How will various factors affecting the bond market work? Where are the investment opportunities? How do bond default disposal and bond market develop under the new normal of economy? In order to discuss the above issues in depth, Beijing DOCVIT Law Firm will hold a seminar “bond default disposal and bond market development under the new normal of economy”. At the seminar, DOCVIT bond default dispute resolution new product line will be released; the product line studies and analyzes the development environment of China’s bond market and the problems and challenges facing its dispute resolution in the context of the new normal of economy and, from a legal perspective, explores the new ideas on bond default disposal in the context of tighter regulation.
[08/03]3rd Forum on China’s Economic Development and Legal Regulation and Release Ceremony of GLGA Blue Book of China’s Non-performing Assets 2018In recent years, in the face of a complex international environment and arduous tasks of domestic reform, development and stability, China's economy has maintained a generally steady development trend. However, the Sino-US trade issue is still unresolved and, given the aftershocks of domestic market’s breaking the rigid payment, can China’s economy maintain low volatility and high-quality, stable development in the future? And what opportunities and challenges will China’s macroeconomic development face?