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China Approves Implementation Measures for Foreign Investment Law

The Regulation on Implementing the Foreign Investment Law of the People’s Republic of China has now been formally approved by Li Keqiang, the Chinese Premier. This will act to facilitate the introduction of the Foreign Investment Law of the People’s Republic of China, with both measures deemed to have come into force as of 1 January this year.

Among the major changes introduced in this new legislation and its primary aims are the following:

  • Encouraging Investment from Foreign Sources
    In line with this, measures have been adopted that protect the legitimate rights and interests of foreign investors, while standardising the administration and continually optimising the environment related to all such investments. At the same time, the process of opening up the Chinese market is to be accelerated.
  • Parity of Treatment for Foreign and Domestic Investors
    This will see foreign-invested enterprises entitled to benefit from any government development initiatives in exactly the same way as domestic businesses, while also being eligible to play an equal role in the setting of industry standards and to tender for projects and contracts under government procurement procedures.
  • Safeguarding Foreign-Sourced Investment
    Measures have also been put in place to guarantee that foreign investors will be properly compensated should any of their projects or initiatives be taken into state ownership. In addition, the use of administrative measures to coerce foreign investors / companies to transfer their proprietary technologies to China has been prohibited, while moves to protect business confidentiality and improve the complaints mechanism for overseas-invested firms have also been adopted.
  • Regulating the Management of Foreign Investment
    As well as clarifying the role played by the state-compiled Negative List with regard to foreign investment access, the new legislation also makes clear the required procedures for registering a foreign-invested business, as well as the statutory information reporting protocols and other related mandatory administration issues.

Source: State Council

Content provided by Picture: HKTDC Research
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