The View | China misses its chance to clear up doubts about the Foreign Investment Law

Foreign investor concerns remain as to how national security or international laws would apply, or what constitutes a new project. What is clear is that China will continue to ring-fence its sensitive industries through the negative list

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Chinese leaders, including President Xi Jinping and Premier Li Keqiang (centre), approving the fast-tracked Foreign Investment Law last year, possibly as an olive branch in trade talks with the US. Photo: AFP

Published: 1:00am, 16 Jan 2020Updated: 1:48am, 16 Jan 2020

A day before China’s Foreign Investment Law came into effect on January 1, the authorities released a guidance “Implementing Regulations” to clarify compliance for both local governments and foreign-invested enterprises, which are allowed a five-year transitional period. However, this has failed to fully address the concerns of foreign investors and in some cases, has dismissed their concerns entirely.

The draft of the Implementing Regulations was released for public comment last November, with foreign investors offered just one month to provide input.

The US-China Business Council, which represents more than 200 United States companies with significant presence in China, aggregated comments from a wide swathe of industries last year, providing a detailed compilation of where member companies saw the law falling short. With the release of the November draft of the Implementing Regulations, the council provided an updated assessment, highlighting areas that lack clarity or would benefit from additional transparency.

However, the final version of the Implementing Regulations was released on December 31 in a manner that mirrors the rushed process in which the Foreign Investment Law was passed at the annual meeting of the National People’s Congress last March, suggesting that China has no intention of substantively responding to the concerns of prominent foreign investors or foreign-invested entities.

The National People’s Congress in session in Beijing in March, when the Foreign Investment Law was passed. Photo: Simon Song

First, Article 2 of the Foreign Investment Law defines as “new projects” any foreign investment carried out individually or jointly with other investors.

.css-1m2rp1p{color:#34b8b5;}The View | China misses its chance to clear up doubts about the Foreign Investment Law

The View | China misses its chance to clear up doubts about the Foreign Investment Law