Official says it will have crucial role in enabling better business environment
China will continuously amend the negative list regarding foreign investment in the country and improve the mechanisms through which global investors can express their complaints to facilitate the implementation of the newly passed Foreign Investment Law, said a senior commerce official.
Although the Foreign Investment Law doesn't contain too many clauses, its primary function, as a fundamental law, is to build a framework to protect the rights and interests of global businesses, said Li Chenggang, assistant minister of commerce.
The Ministry of Commerce is currently in partnership with the Ministry of Justice and other related ministries to formulate detailed rules based on the basic principles and clauses of the Foreign Investment Law, according to the official.
Li said the law would play a crucial role in enabling a better business environment in China.
"However, we can by no means improve our business environment merely by resorting to the Foreign Investment Law," said Li. "We must ensure the implementation of other laws like those on intellectual property right and civil affairs, as well as those cracking down on criminal offenses."
China promulgated its first law to regulate foreign investment-related issues in 1979 when reform and opening up just started. The country has promulgated some other laws and regulations since then. They were called the "three law framework" governing foreign investment in China.
With the continuous deepening of the reform and opening-up process, these laws and related regulations were adjusted. For instance, they were amended in 2001 when China was preparing to join the World Trade Organization, and the government made adjustments to the application of relevant laws when the country set up the first pilot free trade zone and implemented the negative list model on a trial basis in 2013.
"China's legal system governing foreign investment has been keeping pace with changes on the ground. In particular, we need to introduce the system of pre-establishment national treatment and negative list for foreign investment. Such new strategic goals naturally call for the commensurate improvement of the country's legal system," said Li.
As China is granting national treatment to foreign investment in a more comprehensive manner, many systems should be stipulated by other laws and regulations that are applicable to both home and foreign investment alike, said Xue Rongjiu, deputy director of the Beijing-based China Society for WTO Studies.
The law will explicitly support global companies in China in carrying out more independent innovation and market expansion, as well as partner with domestic companies to develop both Chinese and third-party country markets in economies related to the Belt and Road Initiative, he said.
China currently is home to more than 2,000 regional headquarters, research and development centers of multinationals, showing their confidence in and recognition of the country's business environment. Foreign direct investment in China rose 3 percent year-on-year to $135 billion in 2018, data from the Ministry of Commerce show.