Investment law: China promises fair competition

17 March, 2019, 15:38 | Author: Myra Gill
  • China-US trade war: New Chinese law seeks to address concerns

After decades of what some called an outdated framework, China today passed a sweeping new Foreign Investment Law.

In a bid to prevent its citizens from seeing and obtaining information that would disadvantage the nation's ruling Communist Party and government, China has blocked access to many overseas websites like Google search, YouTube and Facebook. This is not how China behaves.

"The last-minute efforts are appreciated, but the changes shouldn't have been controversial in the first place and only address a small slice of the overall set of concerns our members have about the uneven playing field foreign companies encounter in China", Tim Stratford, chairman of the American Chamber of Commerce in China, said, per Los Angeles Times.

China's rubber-stamp Parliament on Friday approved a landmark foreign investment law to ease global concerns about its business environment, as the world's second largest economy tries to end a bruising trade war with the US. Just like how business groups are concerned over how the trade talks roll out between President Xi Jinping and US President Donald Trump, they are also anxious about the new foreign investment law.

The speed at which this process was concluded is clearly a response to Beijing's ongoing trade dispute with Washington, Katja Drinhausen, a researcher at the Berlin-based Mercator Institute for China Studies, told DW. The level of inbound M&A, which stood at a record US$56 billion in 2018, is projected to grow still further as the new Foreign Investment Law, signed on 15 March 2019, kicks in on 1 January 2020.

The state will manage foreign investment according to the system of pre-establishment national treatment plus a negative list, the law stipulates.

China-US trade war: New Chinese law seeks to address concerns
Amid skepticism, China fast-tracks foreign investment law to show goodwill to U.S.

US President Donald Trump said on 14 March the negotiations should wrap up within four weeks, adding: "We are getting what we have to get".

In addition, the new law has also met many demands raised previously by foreign businessmen.

The law, to replace existing regulations for joint ventures and wholly foreign-owned enterprises, is created to ease concerns among foreign companies about the difficulties they face operating in the world's second-largest economy. "More than anything else, foreign companies want equal treatment and opportunities", said the group's president, Mats Harborn.

China will work to ensure the employment of college graduates, whose number will reach a new high of 8.34 million this year.

Washington and Beijing have been locked in a tit-for-tat tariff battle as US officials press China for an end to practices and policies they argue have given Chinese firms unfair advantages. These include subsidising of industry, limits on access for foreign companies and alleged theft of intellectual property. In response, China, the world's second largest economy after the U.S., imposed tit-for-tat tariffs on United States dollars 110 billion of American goods.

"In actual practice, our goal is to generate the same amount of job opportunities as we did previous year, which is over 13 million", Premier Li Keqiang told a press conference after the conclusion of the annual session of China's national legislature Friday.



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