China's foreign investment law to usher in new chapter of opening up: CPPCC members

A Tesla Model 3 is displayed at the groundbreaking ceremony of Tesla Shanghai Gigafactory in Shanghai, east China, Jan. 7, 2019. [Photo: Xinhua]

Chinese political advisors say the draft foreign investment law shows China's strong determination and confidence in opening wider to the outside world and promoting foreign investment.

Chinese lawmakers deliberated on the draft legislation at the parliamentary session underway in Beijing.

The draft law touches on a wide range of issues regarding foreign investment in China, including the protection of foreign investors and the management of foreign investment.

The draft law offers pre-establishment national treatment to foreign companies, ensuring foreign investors receive equal treatment in areas outside the negative list, which contains sensitive sectors that are off limit to foreign investors.

Political advisor Zhou Hanmin suggested that the new law shows China's determination to follow through with reform and opening up in a new historical context, and links Chinese circumstances with international rules.

"The draft law reflects the basic principles of legislation on foreign investment across the world, which is completely consistent with the world's common practices. The legislation on foreign investment in any country must reflect two basic principles: promotion and protection. It is the criteria for the foreign discussion on Friday. Meanwhile, the law shows the independence, activeness and self-consciousness of China's reform and opening up."

The draft law also requires local governments to establish a mechanism to resolve complaints from foreign companies and fulfill their contractual commitments to foreign companies.

If adopted, it will replace three existing laws on foreign equity joint ventures, wholly foreign-owned enterprises, and cross-border contractual joint ventures.

Political advisor Yang Jinghua highlighted the need to address the issue of local protection.

"The draft law stipulates that a complaint mechanism must be established for foreign companies, which requires local governments at all levels to fulfill their commitments in attracting foreign investment. Some new officials ignore the old accounts or refuse to fulfill their contracted legal duties. This is intolerable. This is a protection for investment activities."

Political adviser Gao Yan suggested that foreign companies should be incorporated into China's credit management system.

"In terms of management, I think, the foreign companies should be incorporated into the credit management system. In other words, their business activities in China should be incorporated into the society's or market's credit management system. "

Official data showed that about 960-thousand foreign-invested enterprises had been set up in China by the end of 2018, with the accumulated foreign direct investment exceeding 2 trillion U.S. dollars.

Some global investors suggest the new law will further ease market access and promote long-term operations for foreign investors.