China-US trade war: New Chinese law seeks to address concerns

China foreign investment law: Bill aims to ease global concerns

China foreign investment law: Bill aims to ease global concerns

It will take effect on January 1, 2020, and should make it easier for foreign companies to establish their names in China.

The law bans government officials from forcing foreign firms to hand over technology to Chinese companies.

Rushed law to appease Trump?


Foreign business groups say the legislation was rushed through with little attention paid to their views.

In a statement earlier this week, the American Chamber of Commerce in China welcomed the "legislative effort to improve the foreign investment climate".

It was first proposed in 2015, before being shelved by China's ruling Communist Party.

Editor's note: Pan Deng is an assistant professor at the China University of Political Science and Law.

China has so far promised billions of dollars in planned tax cuts and infrastructure spending, as economic momentum is expected to cool further due to softer domestic demand and a trade war with the United States. The two sides slapped tariffs on exports worth hundreds of billions of dollars a year ago.

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Chinese President Xi Jinping and Chinese Premier Li Keqiang cast their votes on the new foreign investment law at the closing session of the National People's Congress (NPC) in Beijing.

China's National People's Congress (NPC) on Friday rubber stamped a new foreign investment law in a bid to address long-standing problems faced by foreign firms and investors operating in China - such as unequal market access, forced technology transfers and unfair treatment when it comes to public procurement.

The legislation aims to address long-running grievances from foreign businesses, but the USA and European chambers of commerce have voiced concerns that they were not given enough time to give their input.

There was some criticism of the law change, however, with the American Chamber of Commerce calling some of the provisions "quite general".

However, Parker added that "while the language on criminal liability is positive, it will be hard to enforce".

Chinese officials have rejected accusations that foreign companies are treated unfairly, arguing any tech secrets handed over were part of mutually agreed deals. Although the foreign investment management mechanism has evolved rapidly in recent years, there are still many changes to go both in legislation and in practice.' The research was produced in connection with an upcoming Linklaters report that highlights several key trends that should be viewed as guidelines for success by global companies, investors and brokers seeking to complete Chinese inbound M&A deals.

In addition to the law's mandate of "equal treatment" of foreign and domestic companies, another notable element includes making nationwide the so-called negative list - which defines which industries or activities foreign businesses are able to operate in. "We have to prepare more and we have reserved policy room (to address uncertainties)", Li told reporters at a news conference on Friday at the conclusion of the annual parliament meeting.

The law includes provisions on national security, which some firms worry could be used as cover to shut worldwide businesses out of certain projects or to confiscate investments altogether.

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