What is the Foreign Investment Law?


foreign investment law

The foreign investment law, once adopted, will become a new and fundamental law for China’s foreign investment, says the explanation delivered by Wang Chen, vice chairman of the NPC Standing Committee, to deputies attending an NPC plenary session.

(investment activities directly or indirectly conducted by foreign natural persons, enterprises and other organizations)

a foreign investor establishes a foreign-funded enterprise independently or together with any other investor

a foreign investor acquires shares, equities, property shares or any other similar rights and interests of an enterprise within the territory of China

a foreign investor invests in any new construction project independently or together with any other investor

investments stipulated in laws, administrative regulations, or defined by the State Council

The foreign investment law is a comprehensive and fundamental set of legal standards for foreign investment activities in China under new circumstances, and shall play a leading role as an overarching law in this field.

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 state shall guarantee that foreign-invested enterprises are able to participate in standard-setting work on an equal footing in accordance with law, and mandatory state standards shall apply equally to them, according to the document.

The state shall guarantee that foreign-invested enterprises can take part in government procurement activities through fair competition in accordance with law, and government procurement shall afford, in accordance with law, equal treatment to products of foreign-invested enterprises produced in China, it says.

The conditions for technological cooperation in an investment project shall be negotiated in a fair and equal manner and agreed upon by all parties to the investment, and government bodies and their employees shall be prohibited from using administrative measures to force technology transfer.

Sectors not on the entry negative list for foreign investment will be managed in accordance with the principle of equal treatment for domestic and foreign capital.

Competent authorities shall review foreign investors’ license applications with the same conditions and procedures as those for domestic investors, unless otherwise stipulated in other laws or administrative regulations, according to the document. 

The draft also makes it clear that the state shall manage foreign investment according to the system of pre-establishment national treatment plus a negative list.

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