China's legislature is reportedly considering adopting a new law that will govern the country's foreign investment law. A state media report added that these new regulations will help streamline existing investment laws, as well as prevent the rather rampant practice of forced transfer of technology.
Simply dubbed as the "unified law," this new foreign investment regulations will replace at least three existing laws regarding Chinese and foreign equity joint ventures. It will also replace laws on non-equity joint ventures and wholly foreign-owned enterprises. A draft of these proposed regulations was submitted during a meeting of the Standing Committee of China's National People's Congress which open on Sunday.
Once fully adopted, the new law is expected to prevent local government units from restricting market access to foreign firms. The new law will also mandate local governments from forcing foreign companies to transfer their technology.
Many observers said that once these new regulations are in place, it will give foreign investors a boost of confidence by being able to enjoy the privileges that many Chinese companies in most sectors do. Additionally, an exception of these privileges will be adopted especially those on included on a negative list.
Officials from the United States and the European Union have, for a long time, complained about the lack of fair access for foreign companies in China's massive market. Officials have also noted the rampant incidents of technology and intellectual property theft.
In a statement, the National People's Congress said, "In order to further expand opening up, actively promote foreign investment, protect the legitimate rights and interests of foreign investment, and promote the formation of a new pattern of comprehensive opening, the State Council has proposed a bill."
Some market analysts have noted that this new foreign investment law is a sign that China is slowly opening up its trade borders to the rest of the world. Some analysts said that this is China's way of offsetting the negative effects of the bitter trade war which the country is currently facing against the United States.
On matters of the trade war, Chinese President Xi Jinping and U.S. President Donald Trump recently agreed on a 90-day trade truce. The two leaders agree to temporarily end the bitter trade war as negotiations for a more permanent solution regarding the two countries' trade dispute are adopted. Senior officials from the two countries have confirmed that negotiations about trade balance have been discussed over the past few weeks.
