Draft eyes equal treat­ment for in­vestors from abroad

China Daily (Latin America Weekly) - - Front Page - ByBy JINGJING SHUIYU,SHUIYU, ZHONGZHONG NANNAN and CAOCAO YINYIN in Bei­jing

For­eign en­ter­prises will re­ceive pre-es­tab­lished na­tional treat­ment plus a neg­a­tive list man­age­ment sys­tem, and will en­joy the same rights as do­mes­tic com­pa­nies to par­tic­i­pate in ac­tiv­i­ties in­clud­ing is­su­ing stocks and bid­ding for govern­ment pro­cure­ment projects in China, ac­cord­ing to a draft law made pub­lic by the coun­try’s top leg­is­la­ture on Sun­day.

The draft for­eign in­vest­ment law was sub­mit­ted to the Stand­ing Com­mit­tee of the Na­tional Peo­ple’s Congress for a first re­view. It is ex­pected to re­place the coun­try’s three cur­rent statutes con­cern­ing wholly for­eignowned en­ti­ties, with the move seen fur­ther pro­mot­ing the rights of for­eign in­vestors.

Cap­i­tal con­tri­bu­tion, prof­its and cap­i­tal gains of for­eign in­vestors in China can be freely trans­ferred out of the coun­try as ei­ther ren­minbi or in other for­eign cur­rency de­nom­i­na­tions, ac­cord­ing to the draft law.

The doc­u­ment stip­u­lates that the State pro­tect the in­tel­lec­tual prop­erty rights of for­eign in­vestors and en­cour­age tech­nol­ogy co­op­er­a­tion based on vol­un­tary prin­ci­ples and com­mer­cial rules. The con­di­tions for such co­op­er­a­tion are de­ter­mined by con­sul­ta­tion among in­volved par­ties.

Tang Wen­hong, di­rec­tor-gen­eral of the Depart­ment of For­eign In­vest­ment Ad­min­is­tra­tion in the Min­istry of Com­merce, said the min­istry and other rel­e­vant au­thor­i­ties have been fa­cil­i­tat­ing the leg­isla­tive process of the for­eign in­vest­ment law.

As com­mon in­ter­na­tional prac­tice, Tang said the essence of pre-es­tab­lished na­tional treat­ment is to pro­vide na­tional treat­ment for for­eign cap­i­tal dur­ing en­try stages.

How­ever, there are some ex­cep­tions to such treat­ment. Many coun­tries adopt a neg­a­tive list to re­strict for­eign cap­i­tal from en­ter­ing key in­dus­tries or sen­si­tive ar­eas. All fields not on the neg­a­tive list are ac­ces­si­ble to for­eign cap­i­tal with­out gov­ern­men­tal ap­proval nec­es­sary in ad­vance.

The min­istry has urged provin­cial com­merce de­part­ments to im­prove work­ing mech­a­nisms to bet­ter deal with for­eign com­pa­nies’ com­plaints, and promptly re­spond to and ad­dress prob­lems.

Ac­cord­ing to the draft, com­pa­nies will not be reg­u­lated based on their own­er­ship but on “who is in con­trol”.

For­eign com­pa­nies in China con­trolled by over­seas in­vestors will be con­sid­ered for­eign, while those con­trolled by Chi­nese in­vestors will be re­garded as Chi­nese.

The move will build a pre­dictable and trans­par­ent busi­ness en­vi­ron­ment for global in­vestors and safe­guard their in­ter­ests and rights, en­sur­ing that they are given na­tional treat­ment and fair mar­ket con­di­tions, said Ma Yu, a re­searcher at the Chi­nese Academy of In­ter­na­tional Trade and Eco­nomic Co­op­er­a­tion in Bei­jing.

“Un­der such cir­cum­stances, multi­na­tion­als will be keen to strengthen co­op­er­a­tion with their Chi­nese part­ners in pro­mot­ing re­gional devel­op­ment, tech­no­log­i­cal in­no­va­tion, out­sourc­ing ser­vices and prod­uct safety,” said Liu Jun­hai, a pro­fes­sor of com­mer­cial law at Ren­min Uni­ver­sity of China.

De­spite the down­turn in global cross-bor­der direct in­vest­ment and in­creas­ingly in­tense global competition, for­eign direct in­vest­ment into China has con­tin­ued a strong run this year, the Min­istry of Com­merce said.

A to­tal of 54,703 new for­eign­funded com­pa­nies were es­tab­lished in the first 11 months this year in China, up 77.5 per­cent year-on-year. Dur­ing the pe­riod, FDI flow­ing into the tra­di­tional man­u­fac­tur­ing sec­tor in­creased 19.1 per­cent from a year ear­lier.

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