With unified provisions for the entry, promotion, protection, and management of foreign investment, this year’s two sessions might see innovative proposals for improvement of legal provisions on inflow of offshore capital that would address investor concerns, experts believe. 

Illustrations: VCG

The foreign investment law has made fundamental changes to the management model, clarifying that access to foreign investment involves pre-entry procedures and the negative list, implying the case-by-case approval system will be scrapped. 

Mats Harborn, president of the European Union Chamber of Commerce in China, told the People’s Daily that if the foreign investment law is properly implemented, it would afford European enterprises equal treatment in China. Besides the negative list, European investors would be treated at par with local ones. However, in the last few years, the pre-entry treatment has not been new to foreign investors in China. 

Negative list 

The negative list includes areas that prohibit and restrict foreign investment. Other than provisions in the list, the market will be fully opened, offering Chinese and foreign investors the same treatment.

“To put it briefly, as long as it’s not part of the enlisted areas, no approval is required. Only registration and filing are needed. Such practice entitles powers besides those written down,” Kong Qingjiang, dean of the School of International Law at the China University of Political Science and Law, told the People’s Daily Saturday. 

“Over half of members [the European Union Chamber of Commerce in China] continue to report unfavorable treatment compared to local firms. Hopefully repeating [pre-entry national treatment] in the context of a proper law might help make it a reality,” Harborn said. 

“From a practical point of view, the negative lists for the free trade zones (FTZ) pilot program and the national version have been trimmed year-on-year. This indicates that access given to foreign investment is expanding,” Kong said. 

Meanwhile, the foreign investment law is authorizing the State Council to issue a negative list. Such a model has made the list more institutionally credible.

“Comments that label the negative list as a tool to discriminate against foreign-funded enterprises are not fair,” Kong pointed out. 

The negative list 2018 edition introduced opening-up measures in 22 areas including banks, automobiles, railway trunk lines, power grids and gas stations, easing nearly a quarter of restrictions, leaving 48 items, according to MOFCOM briefing.