Draft legislation to serve as basic law on foreign investment

Zhang Yesui (R), spokesperson for the second session of the 13th National People's Congress (NPC), speaks during a press conference on the agenda of the session and the work of the NPC at the Great Hall of the People in Beijing, capital of China, March 4, 2019. The second session of the 13th NPC will open in Beijing on March 5.[Photo: Xinhua]

Authorities in charge of the ongoing session of China's top legislature are suggesting the draft foreign investment law, which will be discussed and voted on in the coming days, will serve as the basic law connected to foreign investment in China.

The draft law on foreign investment is set to be submitted in the coming days to the ongoing session of the National People's Congress for review.

Once implemented, the law will replace three existing laws on Chinese-foreign equity joint ventures, wholly foreign-owned enterprises and contractual joint-ventures, which have been on-the-books since 1980s.

The new draft stipulates that foreign investment in China will be subject to pre-established national guidelines, on top of a negative list management system. The case-by-case approvals will be abolished. Industries where foreign investment is prohibited or restricted are specified in the negative list. Industries that are not on the list will be fully open, with domestic and foreign firms enjoying the same treatment.

Zhang Yesui, spokesman for the second session of the 13th NPC, says the draft is expected to provide a streamlined basic framework to promote foreign investment.

"This is fundamental change to China's foreign investment management system, and it will help create a more open, transparent and predictable environment for investors, as well as provide stronger legal guarantees for greater opening across the board."

The draft also has clear positions on the protection of foreign investors' rights in areas such as intellectual property rights protection and technology transfer.

Zhang Yesui says investments from Hong Kong, Macao and Taiwan are classified in a distinctive category as non-foreign investment, but will not have the same status as domestic capital. He says this means they'll be managed in reference to foreign investments.

"With the new foreign investment law in place, it does not change relevant legal applications with the investment from Hong Kong, Macao and Taiwan. And going forward, the system will continuously to be improved along the way to provide a more open and easy business environment for investors from Hong Kong, Macao and Taiwan," says Zhang Yesui.

Meanwhile, Zhang Yesui has taken time to rebuff suggestions the Belt and Road Initiative is creating debt traps for certain countries.

He says since first being proposed in 2013, the Belt and Road Initiative has helped enhance connectivity, and created more economic opportunities for China and world. He notes that 67 countries signed cooperation agreements with China last year, taking the total to 152, including international organizations.

"When it comes to the issue of debt, I want to say that the Belt and Road cooperation is guided by the principle of collaboration, consultation and shared benefits. At the same time, it follows market principles, and it aims to create high-quality development. Here I do want to stress that whether there is a project or investment or financial cooperation, decisions are made jointly by all participating parties," says Zhang Yesui.

Meanwhile, lawmakers at the NPC sessions are planning to draft a new personal information protection law, in a bid to fight against the improper collection, abuse and leak of Chinese citizen's personal information.

The draft of a law on the management and control of exports is also on the agenda, with authorities saying it will help improve existing legislation on national security and social governance.