Is China rushing to please the US with its new foreign investment law? US President Donald Trump has issued demands for the Trade War to come to an end between the United States of America and China. As a result, the Chinese Government is going all out to reach a settlement with the United States of America and is all set to pass a new foreign investment law. After the United States of America, the second largest economy in the world is that of China.
But Is It Happening Way Too Fast?
To global analysts, China is actually ‘rushing’ with passing this new law and as such, the wording in the law, could be vague and about 39 clauses in the new law, are being doubted. Lester Ross, Beijing AmCham (China Policy Committee of the American Chamber of Commerce) says, “The problem is that there are many provisions in the law, which do not address the concerns of foreign investors and in addition, the provisions are in some cases so broadly-worded that they actually create a basis for mistreatment of foreign businesses.”
Walker Wallace, partner at O’Melveny & Myers’, a U.S. international law firm, in Shanghai said, “Putting the five-year term limit basically puts the gun to the heads of the joint venture parties and says you have five years to try and reopen… a deal that was closely negotiated before where people made trade-offs one way or another. And that opens up the possibility for all kinds of mischief.”
What Economists Are Saying
About The New Law
“China has often embraced protectionist policies at the local level. If the open-up policy involves sectors that have long been dominated by local government-owned enterprises, it means these government-run companies will now face foreign competition. Given that their performance is tied to local governments’ fiscal [health], it remains to be seen if local authorities will fully execute the central government’s policies.” Liu, economist – CIER (Contemporary Issues in Education Research).
Mats Harborn, Chamber President of the European Union Chamber of Commerce in China, says,
Mats Harborn, Chamber President of the European Union Chamber of Commerce in China, says, “We are concerned that the drafting of the Foreign Investment Law is being squeezed between the normal legislative process and the negotiation table with the U.S., in part to address the trade conflict. This law will have major ramifications for all foreign companies in China for the foreseeable future, so the drafting process must be given the time and attention due to such an important piece of legislation, and proper consultation periods should be respected.”
What The Chinese Have To Say
In the words of Wang Chen, the Vice Chairman of the standing committee of parliament of China, “The law includes many stipulations that ensure domestic and foreign enterprises are subject to a unified set of rules and compete on a level playing field. It will create a stable, transparent and predictable market environment featuring fair competition. The state shall protect the intellectual property rights of foreign investors and foreign-invested enterprises, and encourage technological cooperation based on the principle of voluntariness and commercial norms.”
According to Zhang Yesui, spokesman of the NPC (National People’s Congress),
“This is fundamental change in China’s foreign investment management system, and help create a more open, transparent and predictable environment for investors and provide stronger legal guarantee on China’s new opening-up.” This new foreign investment law that is being adopted by China, will replace three current laws and will be the basic law for China’s foreign investments.
When Will This Law Be Passed?
It will be passed on March 15th, 2019, at the close of parliament. The law will not be rejected, of that there can be no doubt, as the people in the legislature, have been chosen by the ruling Communist Party, because of their loyalty.