China's draft foreign investment law set to allay concerns

2019-03-13 21:00 932

BEIJING, March 13, 2019 /PRNewswire/ -- A news report by on China's draft foreign investment law:

On Jan. 7, 2019, large crowds of people gathered at the Lingang Industrial Park in Shanghai to witness the groundbreaking ceremony of the Tesla Shanghai Gigafactory. The latest news indicates that the Tesla factory will start operation by the end of this year. Only a year ago, however, this kind of project would never have been approved.

In 2018, China unveiled its new policy to gradually lift the cap on foreign ownership in the auto sector, starting with new-energy vehicles. The U.S. electric car-maker Tesla Inc. became the first to benefit from the new regulations allowing foreign companies to set up wholly-owned subsidiaries in China. This approach gives Tesla an opportunity to make huge profits from the world's largest vehicle consumption market and at the same time, enables the Chinese people to enjoy green transport and a low-carbon lifestyle through the China-made Tesla Model 3, a high-quality car to be sold at a reasonable price.

In addition to the auto sector, other areas have also opened their doors to foreign investment. The current Special Administrative Measures for Foreign Investment Access, also known as the Negative List, has reduced the number of restricted sectors from 63 to 48. In other words, foreign investors and Chinese enterprises receive equal treatment in all areas outside the Negative List. So those who want to know whether a specific investment channel in China is banned or restricted simply need to check whether it appears on the Negative List. And that list is sure to continue to get shorter in the future.

So, what will guarantee a more transparent, fair, stable, convenient and predictable investment environment for foreign enterprises? Well, here it is – the Draft Foreign Investment Law. As one of the major topics of this year's Two Sessions, the draft law is the most powerful legal guarantee of a sound foreign investment climate.

The draft law makes provisions in the following five areas: First, equal treatment will be given to Chinese and foreign-funded enterprises. Second, national treatment plus the Negative List management system will be fully implemented before the entry of foreign companies. Third, policies and measures to actively attract foreign investment will be incorporated into the law. Fourth, foreign investment management will be further simplified. Fifth, domestic market access and investment standards will be consistent with international norms.

Moreover, in view of issues related to intellectual property protection and the transfer of technology by enterprises, a concern of the international society in recent years, the draft law has made clear provisions to fully protect the legitimate rights and interests of foreign investors. In this way, Tesla CEO Elon Musk doesn't have to worry about the so-called "forced technology transfer" of his company.

The Draft Foreign Investment Law will be voted on by the deputies at the closing meeting of the second session of the 13th NPC on March 15. We are looking forward to this historic new law, which demonstrates China's determination to further open up to the outside world.

China Mosaic
China's draft foreign investment law set to allay concerns


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