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March 12, 2019

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Law aims to protect foreign investors

CHINA’S draft foreign investment law has been well received by foreign investors, who believe it will further improve the country’s business environment.

A new draft of the law was submitted to China’s national legislative session for a third reading last week, and has been deliberated by lawmakers and discussed by political advisers over the past few days.

The draft aims to improve the transparency of foreign investment policies and ensures that foreign-invested enterprises participate in market competition on an equal basis.

Stephan Kothrade, Asia-Pacific president of German chemicals giant BASF, said the company welcomes the draft law, with the belief that it will help effectively address issues foreign investors face in China.

Harley Seyedin, president of the American Chamber of Commerce in South China, said: “For foreign companies in China, I think everyone is waiting for the draft law to be passed, as the law will create a level playing field where everyone can participate.”

With unified provisions for the entry, promotion, protection and management of foreign investment, the law is “a new and fundamental law” for China’s foreign investment and an innovative improvement of China’s foreign investment legal system.

The draft stresses more investment promotion and protection than the three existing laws, a positive signal for foreign firms in China, said Ma Zheng, vice president of the China subsidiary of the agricultural commodities trader Cargill.

Ma believes the law would provide stronger legal guarantees for foreign investors and companies to safeguard their interests. “It’s going to make China’s business environment more open, equitable and transparent for foreign firms,” he said.

By the end of 2018, about 960,000 foreign-invested enterprises had been set up in China, with the accumulated foreign direct investment exceeding US$2.1 trillion.

China advanced to a global ranking of 46 in terms of ease of doing business last year, up from 78 in 2017, according to a World Bank Group report released last year.

“This shows the constant improvement in our business environment, and greater progress might be made this year,” said He Lifeng, head of the National Development and Reform Commission.

The new law will boost foreign investors’ confidence in China since their rights and interests will be legally protected, said Cai Hua, a legislator and director of Wisely Law Office in Tianjin.

“A country with a relatively complete legal system will be an ideal destination for foreign investment,” Cai said.

Adam Dunnett, secretary-general of the EU Chamber of Commerce in China, said: “It will give more people confidence in China. If you’re a foreign investor, and you’re going to read a law about China, probably the first one you’re going to read is the foreign investment law.”


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