Draft foreign investment law levels playing field, a positive sign for foreign businesses

A draft foreign investment law pending a third reading includes many stipulations that ensure domestic and foreign enterprises are subject to a unified set of rules and compete on a level playing field, says an explanatory document on the draft available to the press Friday 8 March, according to Xinhua News Agency.

Government policies supporting enterprise development shall apply equally to foreign-invested enterprises, says the document. The state shall guarantee that foreign-invested enterprises are able to participate in standard-setting work on an equal footing in accordance with law, and mandatory state standards shall apply equally to them, according to the document. The state shall guarantee that foreign-invested enterprises can take part in government procurement activities through fair competition in accordance with law, and government procurement shall afford, in accordance with law, equal treatment to products of foreign-invested enterprises produced in China, it says. The conditions for technological cooperation in an investment project shall be negotiated in a fair and equal manner and agreed upon by all parties to the investment, and government bodies and their employees shall be prohibited from using administrative measures to force technology transfer.

Bernard Dewit, chairman of the Belgian-Chinese Chamber of Commerce, said he was pleased the new law will give foreign companies equal treatment in government procurement. “So that is something very favorable,” he told China Daily at his law firm in Brussels. He praised the draft law for addressing concerns such as the protection of intellectual property rights and national treatment of foreign companies, and called the draft law a positive sign from China for foreign businesses.

China’s enactment of the foreign investment law is expected to further facilitate high-quality investment while protecting the legitimate rights and interests of foreign investors, Wang Chen, vice-chairman of the Standing Committee of the National People’s Congress, said on Friday 8 March, according to China Daily. Formulation of the foreign investment law is an important measure for implementing the central government’s policies and plans on expanding opening-up and boosting foreign investment, Wang said at the second session of the 13th NPC.

The move is a “full testament” to China’s determination and confidence in opening wider to the outside world and promoting foreign investment in the new era, according to the explanatory document on the draft.

The draft law was reviewed by the NPC Standing Committee in December and January, and China’s top legislature is scheduled to vote on it on March 15. The draft law, if approved, is to replace the country’s three current statutes concerning wholly foreign-owned entities, with the move seen as one further promoting the rights of foreign investors.