China: New Foreign Investment Law In China Will Come Into Effect In 2020

The Foreign Investment Law of the People’s Republic of China (the “Foreign Investment Law”) was passed at the Second Session of the 13th National People’s Congress and will come into effect on January 1, 2020. The Foreign Investment Law will replace the Law of the People’s Republic of China on Sino-foreign Equity Joint Ventures, Law of the People’s Republic of China on Wholly Foreign-owned Enterprises and Law of the People’s Republic of China on Sino-foreign Cooperative Joint Ventures as the basic law for the utilisation of foreign capital in China. The Foreign Investment Law specifies that foreign investment shall enjoy pre-entry national treatment and writes the “Negative List” that has been implemented in practice in recent years into law. In short, the Foreign Investment Law establishes the basic framework for the access, promotion, protection and management of foreign investment in view of investment protection and fair competition. The new Foreign Investment Law is believed to improve the administrative efficiency and strikes a better balance between maintenance of local economy’s prosperity and encouragement of foreign capital.