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What is China’s new Foreign Investment Law and how important is it?
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. The so-called three major statutes (and related implementation measures) currently applicable to foreign investment in China (the so-called Three FIE Laws) will be void as of January 2020.
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 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.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.