After almost four years of discussion and revision, the Foreign Investment Law, a legal basis for the utilization of foreign capital in China in the new era, was finally passed at the second session of the 13th National People's Congress on the March 15.
Similarly, Sudheendra Kulkarni, an Indian expert on China, said the law should be welcomed by all since it shows Beijing's commitment to continuing with its policy of reform and opening-up with greater vigor.
Tim Stratford, chairman of the American Chamber of Commerce in China, was quoted by AFP as saying that the changes "only address a small slice of the overall set of concerns our members have about the uneven playing field foreign companies encounter in China". Foreign investment has become an important driver of China's economic and social development. China's growing economy has become a huge market for top U.S. companies like General Motors, Boeing and Apple.
United States companies are also feeling pressure from the trade conflict and Chinese slowdown.
Moreover, the China (Shanghai) Pilot Free Trade Zone, established in 2013, together with another 11 FTZs, has been actively exploring new approaches to managing foreign investment.
With unified provisions for the entry, promotion, protection, and management of foreign investment, it is a new and fundamental law for foreign investment in China.
Drinhausen said the law brings more clarity and enshrines equal treatment in law but doesn't offer complete protection against political influence.
The new law will take effect on 1 January 2020.
This has dispelled the concerns of foreign enterprises on the exclusion of their products from government procurement.
"The newly signed Foreign Investment Law in China dramatically increases scope for foreign investors" Chinese M&A and investment strategies. According to the legislation, when formulating laws, regulations, and rules related to foreign investment, lawmakers should listen to the opinions and suggestions of foreign-invested enterprises, guaranteeing on a legal level that foreign investors can interact effectively with lawmakers and policymakers.
With the new law, China will be able to better protect foreign investors' legitimate rights and interests, and create a law-based business environment that is internationalized and enabling.
China will also amend its intellectual property law and "introduce a punitive damages mechanism to ensure that all infringements will be seriously dealt with", Chinese Premier Li Keqiang told reporters at the end of the parliament's two-week session.
In a bid to prevent its citizens from seeing and obtaining information that would disadvantage the nation's ruling Communist Party and government, China has blocked access to many overseas websites like Google search, YouTube and Facebook. Such a principle is also reflected in other aspects such as standard setting, government procurement, financing, land use, bidding and oversight.
In a survey conducted in November and December for the American Chamber of Commerce in China, a third of companies who responded said they were limiting their investments in China because of concerns about intellectual property theft and forced tech transfers.