Takeaways
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Law affirms equal legal standing of foreign-backed enterprises and Chinese competitors.
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Local governments required to follow through on commitments made to foreign investors.
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Intellectual property protection and equality in government procurement enshrined in law.
On March 15, 2019, the National People’s Congress (NPC, China’s legislative organ) of the People’s Republic of China (PRC) passed the Foreign Investment Law. The Foreign Investment Law will come into effect on January 1, 2020.
The National Bureau of Statistics (NBS) of China released certain economic data on March 14, 2019. During January to February, China’s year-on-year cumulative growth rate of industrial value added rose 5.3 percent, the lowest growth rate since early 2009, as U.S. tariffs and weakening domestic demand have impacted. Given the trade disputes and ongoing trade negotiations with the United States, the Chinese government has accelerated the issuance of the Foreign Investment Law to demonstrate its positions on major concerns of foreign investors, which may facilitate its trade negotiation with the U.S. government.
This article will discuss the general principles set forth in the new law, its major impact on foreign investors and foreign-invested enterprises (FIEs), and ambiguities to be clarified as soon as practical.
