Draft law key to drawing more investment
China’s enactment of a new foreign investment law is expected to further facilitate high-quality investment while protecting the legitimate rights and interests of foreign investors, Wang Chen, vicechairman of the Standing Committee of the National People’s Congress, said on Friday.
Formulation of the law is a key measure in implementing central authorities’ policies and plans to expand opening-up and boost investment, Wang told deputies at the second session of the 13th NPC. Wang called it a “full testament” to China’s determination and confidence in opening wider and promoting foreign investment in the new era.
The top legislature is set to vote on the draft law on March 15. If approved, it would replace three statutes on wholly foreign-owned entities and joint ventures.
Efforts to unify foreign investment law are part of a decadeslong commitment to open up the economy. China will foster a world-class business environment, President Xi Jinping said at the opening of the first China International Import Expo in November.
According to the draft law, foreign enterprises would receive pre establishment national treatment plus a negative list management system. It stipulates that the State would protect the intellectual property rights of foreign investors and encourage technology cooperation based on voluntary principles and commercial rules.
Zeng Hongqing, chairman of Guangzhou Automobile Group Co, said on Friday that China is expected to attract more investment once the measure takes effect.
Zeng, also an NPC deputy, said competition would be increasingly intense, with more foreign capital in the market. “But competition can motivate homegrown brands to develop and flourish. It’s a winwin situation,” he said.
Liu Chunsheng, an associate professor at Beijing-based Central University of Finance and Economics, said the law would let foreign businesses follow the same market entry regulations as their domestic counterparts, except for industries on the negative list.
“It will enable foreign businesses to form a clear, stable expectation of whether they can access the Chinese market,” Liu said.
The legislation has taken about three months to develop, a process that usually takes a year or more. China’s deep experience in opening-up and examples from mature market economies have allowed the accelerated schedule without sacrificing quality, Liu said.
The draft foreign investment law will create a more transparent, stable and predictable business environment for global companies in China, which will in turn be a strong magnet for investment, creativity and productivity, senior business executives with foreignbased companies said in recent interviews.
They spoke as the National People’s Congress prepares to vote on March 15 on the draft foreign investment law.
“As the bill has entered the review and decision-making stage, we certainly are paying close attention to how it evolves and how it may impact us,” said Ian Chung, China CEO of AECOM, a US-based urban and infrastructure planning company.
Chung said China’s continuous efforts in further opening-up are definitely welcomed by foreign companies.
Curt Ferguson, president of Coca-Cola for China and Korea, said, “We are happy to see China is shifting its focus to high-quality growth, as the stable and sustained growth of China’s economy is an important basis for our development in the country.”
The US company views the draft law as a practical tool to provide new business opportunities across China.
Gao Yan, CEO for China of Germany’s Thyssenkrupp, said China’s efforts to revamp existing foreign investment laws convey very positive signals.
“We have seen a variety of further concrete opening-up measures designed to improve the business environment for foreign investment, such as lowering tariffs, simplifying the approval process for business licenses and implementing the new negative list for foreign investment,” he said.
A level playing field enables strong players to grow in a sustainable manner and tap more opportunities inside and beyond the China market, no matter whether they are Chinese or foreign companies, said Yan Bin, a member of the 13th Chinese People’s Political Consultative Conference National Committee and co-chair of the Belt and Road General Chamber of Commerce (Hong Kong).