China is rushing through overseas investment reform at unprecedented speed ‘under pressure from US’
- The Foreign Investment Law of the People's Republic of China aims to address issues raised by US President Donald Trump at summit with Xi Jinping last year
- Move viewed as attempt to avoid escalation in tariffs placed on US$250 billion of Chinese exports, which may rise from 10 per cent to 25 per cent in March
Under pressure from the United States demands to reform its economy as part of the trade war, China is rushing through a law that would offer more protection to foreign companies, business leaders have said.
The Foreign Investment Law of the People's Republic of China (FIL), claims to “further expand the scope of opening-up, to actively promote foreign investment, to protect the lawful rights and interests of foreign investment”.
It covers many of the items on the wish list of reforms released by US President Donald Trump after his summit meeting with Chinese President Xi Jinping in Buenos Aires in December, including forced technology transfer, intellectual property protections and the safeguarding of foreign companies’ capital.
On the whole, the law pledges “equal treatment” for foreign companies operating in China, but reserves the right to a “review of foreign investment that affects or may affect national security”.
The draft law is viewed as an attempt by China to avoid an escalation in the US tariffs placed on US$250 billion of its exports, which are due to rise from 10 per cent to 25 per cent on March 2 if Washington’s demands are not satisfied.
FIL was actually first drafted in 2015, but was only revisited at the end of 2018 in a response to the reported exodus of international companies from China.
