China - New Foreign Investment Law adopted and will be effective from January 01, 2020

China

New Foreign Investment Law adopted and will be effective from January 01, 2020

On March 15, 2019, new foreign investment law was adopted by the government and it is set to be effective from January 01, 2020. This new law will replace the current three laws pertaining to foreign direct investment, viz;

• Chinese-foreign equity joint ventures law;
• Wholly foreign-owned enterprises law;
• Chinese-foreign contractual joint ventures law

The new foreign investment law is set to integrate all the above-mentioned regulations into a single law, which will in turn benefit and protect the foreign investors. The new law also aims to protect and attract foreign investments through legislative means. Some provisions are as under:

• Foreign investors will be treated equally with domestic investors at the time of setting up of entity (Article 4)
• Participating in government procurement/benefits/incentives plans (Article 16)
• Robust IP protections for foreign investors (Article 22)
• Restrictions on government officials in case of forced technology transfers (Article 22)
• Equal treatment for foreign investors applying for licenses (Article 30)
• Protection of foreign investments from expropriation (Article 20)

Implications

The new law can help foreign entities in protecting their IP better in China, which has been a long-standing issue that foreign companies had while investing in China.

© 2019 Shan & Co.