Key Element in ‘Phase 1’ Trade Resolution: China Implements Foreign Investment Law

China has unveiled a regulation on implementing the foreign investment law (FDI) to better protect the legitimate rights and interests of foreign investors.

Premier Li Keqiang signed a State Council decree to publish the regulation. It takes effect on 1 January 2020, the same day when the law becomes effective.

As a matching regulation to the foreign investment law, the regulation highlights the promotion and protection of foreign investment and details measures to ensure the effective implementation of the law.

The regulation encourages and promotes foreign investment via terms to protect the legitimate rights and interests of foreign investors, standardize the administration of foreign investment, improve the business environment as well as advance opening up to a higher level.

The regulation stipulates that foreign-invested enterprises will enjoy the same favorable policies as domestic companies, and will be treated equally in standard-setting and government procurement activities.

In addition, the regulation details measures to compensate foreign investors for requisition, ban forced technology transfer, protect business confidentiality as well as improve the mechanism for foreign-invested firms to file complaints.

The regulation clarifies the implementation mechanism of the negative list of foreign investment access and details registration and reporting system of foreign investment.

The regulation also stipulates investment policies for enterprises from Hong Kong, Macao and Taiwan, and legal responsibilities for violations of the regulation.

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