Global foreign direct investment (FDI) has long been thwarted by unilateralism and trade protectionism. For China, as a promoter of free trade and economic globalization, its efforts have never stopped in striving to create an open world market.
Last year, the country held the first China International Import Expo (CIIE), the biggest one of its kind in the Chinese history, as a move to open its market wider to the rest of the world.
On March 8, a draft of the foreign investment law will be discussed by law-makers at the second session of the 13th National People’s Congress (NPC). Once enacted, it will replace the three existing laws, Chinese-Foreign Equity Joint Ventures Law, Wholly Foreign-Owned Enterprises Law, and Chinese-Foreign Contractual Joint Ventures Law, to work as the basic law for foreign investment in China.
The three above-mentioned laws were introduced in succession after the beginning of China’s reform and opening-up in 1978, forming a legal system for foreign investment management. However, with China’s fast development, in recent years, the three old laws have failed to meet the needs of building a new open economic system in China.
The proposed law, a unified one, primarily aims at further improving the investment environment in China by providing relevant legislative protection for international investors. It intends to ensure fair competition, by emphasizing that partnering firms should abide by the principle of fairness and equal consultation, and administrative departments must not force technology transfers. In addition to this, with the institution of this law, many procedures directed at foreign companies doing business in China will be largely simplified.
Public opinion on the draft law was first solicited as early as 2015, then later it came into public view again on March 4, 2018. Relevant departments have held lengthy discussions over the content several times. It can be said that every word and sentence in the draft law has been carefully thought through and can stand the test of time and practice.
“We think that this will be a very important session, during which such essential issues will be discussed as the new investment law that must be approved within the framework of the National People’s Congress and the country’s development projects,” Miguel Ángel Ramirez Ramos, ambassador of Cuba to China told China Today.
José Luis Bernal, ambassador of Mexico to China, also expressed his expectation of this new law, “In accordance with how the Chinese economy performed last year, I saw that more than 70% of domestic growth was associated with increased consumption. This gives us high expectations for the international suppliers of this great market. Mexico in particular is interested in how we can continue participating with a greater presence of Mexican products in this expansion of consumption. Any measure adopted by the ‘Two Sessions’ in terms of expanding consumption, increasing imports, modifying the rules for foreign investment and supplying third-markets is a topic that specially interests us. So, we are going to be very attentive to the developments of these economic measures.”
Luis Quesada, ambassador of Peru to China, looks forward to more economic cooperation with China which will be ensured by the new law.
“As you know, Peru’s economic and commercial relations with China are very close, of which there is a volume of 20,000 million dollars per year. We believe that this figure increased last year, although we are still waiting for statistics to show that. China represents a very important market not only for traditional exports from Peru, such as minerals, but also for non-traditional exports such as agro-exports. We are interested in providing more products for Chinese consumers little by little. We hope the new public policies on these issues will be favorable in the promotion of trade.”
Philippe Etienne, French diplomatic adviser to the President of France, also commented on the draft foreign investment law to be submitted to the second session of the 13th NPC for deliberation. He said that France, like other EU countries, is eager to see the measures which China will take to further its opening-up, and even more willing to see China open its market to European companies.
Commenting on the foreign investment law, Alfred Schipke, the IMF Senior Resident Representative for China, told a China Today reporter that “We are still waiting for the final version. I think that and the negative list in it are all kind of areas that are quite interesting.”
Amid uncertainties in the world economy and their deleterious impact on global FDI, China’s new foreign investment law will do much to strengthen the confidence of foreign investors, and will be conducive to even greater investment.
