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China approves new foreign investment law to further open its market

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Correspondent in BeijingUpdated:15/03/2019 07:01h

In the full final of this year, the National people’s Assembly – Parliament of organic and China – has approved this Friday, a new foreign investment law that will open up more of its huge market. With its entry into force planned for 1 January of the next year, this new regulation responds to complaints of unequal treatment expressed for decades by the foreign firms and their governments. Attracted by 1,400 million potential consumers in the chinese market, these companies were forced in many sectors to mount joint ventures (“joint-venture”) with local partners to which they should transfer their technology. A standard that will be eliminated by the new law, which also promises to better defend the rights of intellectual property and threatens to punish the officials who leaked to the chinese companies, confidential information of the foreign firms.

China will treat everyone equally: foreign and domestic companies, private and public,” said the prime minister Li Keqiang at the press conference after the closing of the Assembly, broadcast live on state television. In this crowded appearance, the one that stars throughout the year and in which the questions have been selected to avoid sensitive subjects, Li explained that “most sectors are open to foreign investment, but not all at once, but quarter-to-quarter and year-to-year.” Without giving any details or deadlines, he announced that “soon we will submit a negative list to be shorter,” he said in allusion to the sectors that will continue to be closed to the capital outside, as the energy, telecommunications and infrastructures.

Next to employment, growth, trade, domestic investment and the expectations of the market, the entry of foreign capital is one of the six areas to “stabilize” this yearor by the chinese regime. Although the foreign direct investment rose last year by 3 percent to amount to 135,000 million dollars (120,000 million euros), in the last decade has lessened the restrictions of the chinese market.

This new foreign investment law was one of the demands of the united States in the trade war which its president, Donald Trump, began last year with a battery of tariffs billionaires. Although the authoritarian regime in Beijing began to write his first draft in 2015, not accelerated its processing until the middle of last year, when it became one of the battle fronts with the White House. Its adoption by an overwhelming majority in the Parliament “hits” for chinese, where nearly all of the deputies belong to the Communist Party and vote for those who ordered the regime, coincides with the recent negotiations between Beijing and Washington to settle the trade war, which could conclude this month. As usual in the National Assembly, where there is no debate, the new law was passed by an overwhelming majority: 2.292 votes compared to eight against and eight abstentions.

As reported by the Hong Kong newspaper “South China Morning Post,” the legislation recently enacted to replace the three regulations up to now on foreign capital, which were approved between 1979 and 1990 and left many questions open, and at the expense of other regulations and standards.

“As long as China is in transition towards a more sustainable model based on consumption and innovation-driven economy, the need for an environment more open, fair and transparent for all types of investors is vital,” he says in a statement sent to ABC by the dean of the School of Chinese-European Business of Shanghai (CEIBS), Ding Yuan. In his opinion, “with the new law we will see a tipping point of critical and strategic” because “it will help to convince the rest of the world that China is taking steps towards a market economy more open.”

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