The draft foreign investment law (FIL) is replacing the regulations from 1979. China has changed, and so a major overhaul of the law is long overdue, write lawyers Mark Schaub and Xu Ping in China Law Insight. They give an overview of the shortcomings of the current law, and the new features of the FIL. And it might only be the beginning.
Mark Schaub and Xu Ping:
The Foreign Investment Law, if promulgated in its current draft form, will fundamentally change the current foreign investment regulatory landscape. As such its implementation will rely on the formulation of relevant implementation rules as well as other complementary guidance, such as the Negative List, the national security review guidance and information reporting rules. While the circulation of the Draft FIL is an important first step in the context of the landmark reform, there is still a very long way to go in the establishment of a new foreign investment regime and the full implementation of the Foreign Investment Law. According to the Legislative Work Plan for the State Council in 2014, the amendment of the Three FIE Laws falls within the ‘research projects’ of 2014. MOFCOM, as the department responsible for drafting the Foreign Investment Law, has started to circulate the Draft FIL for public comments at the very start of 2015. This demonstrates the determination of the Chinese government to carry out reform. Upon expiration of the period soliciting public comments (approximately 1 month), MOFCOM will revise the Draft FIL on the basis of comments gathered from the public, and submit the revised draft to the standing meeting of the State Council for deliberation and then circulate an updated draft for the Standing Committee of the National People’s Congress to review. With the objective of establishing a “new open economy system” and along with the negotiation of Sino-US and Sino-EU bilateral investment agreements, we believe we are now at the dawn of the era of the new Foreign Investment Law.
Mark Schaub and Xu Ping are lawyers at King&Wood and Mallesons. They are also speakers at the China Speakers Bureau. Do you need them at your meeting or conference? Do get in touch or fill in our speakers´ request form.
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