The Ministry of Commerce released the draft of the proposed new Foreign Investment Law to solicit public opinions on January 19. When this law comes into effect, the existing three laws related to foreign investment will be replaced and the management pattern of case-by-case examination and approval for the foreign investment will come to an end. A new era of “limited permit plus fully reporting” foreign investment access will come.

 

According to the proposed new law, the existing case-by-case examination and approval of foreign investment will be abolished. A new access management system will be established, i.e. “limited permit plus fully reporting” that causes the same treatment of foreign-funded enterprises with the domestic enterprises and negative list management. That means the foreign investors need to apply for the access permit for investing in one of the restricted industries on the negative list. Meanwhile, all foreign investors need to submit a report upon making an investment no matter whether the sector they invested in is on the negative list.

 

In the draft, the organizational form of enterprises is no longer subject to regulation. Instead, “actual control” standards are introduced. That means domestic enterprises controlled by foreign investors will be treated as the foreign investment; foreign investment in the territory of China controlled by Chinese investors will be treated as the domestic investment.

 

When adopted, this law will repeal the Sino-foreign Equity Joint Venture Law, the Wholly Foreign-owned Enterprise Law and the Sino-foreign Contractual Joint Venture Law.

 

Source: news.sina.com.cn, January 20, 2015