What’s China’s new Foreign Investment Law?

Background of the Foreign Investment Law

China’s top legislature passed the new Foreign Investment Law on March 15, 2019, at the country’s annual People’s Congress. The new law will take effect on January 1, 2020.

There are so-called three major statutes (and related implementation measures) that are currently applicable to foreign investment in China – the so-called “Three FIE Laws”, will be void as of January 2020.

What it indicates

The new Foreign Investment Law, although it is short compared to many other Chinese statutes, delivers a clear message that the Chinese government commits to continuing the “Opening-up Policy” and is willing to build a more level playing field for international companies to invest in and do business in China. It is a comforting signal for many foreign as well as Chinese business people in the context of many complicated domestic and international issues faced by China, including the bilateral trade discussions with the U.S.

What it means to international businesses

This new law is very important for international investors that have already been in China, as well as for those planning to get into the Chinese market either by setting up their own subsidiaries or by establishing a joint venture with a Chinese partner. It is advisable to closely watch for upcoming implementation rules, which in China are always equally important as the initial legislation.