Regulations for the Implementation of the Foreign Investment Law in China

Regulations for the Implementation of the Foreign Investment Law came into effect on January 1

On December 13th of last year, the state council adopted the draft regulations of the foreign investment law to implement measures to promote and protect foreign investment. The law specifically addresses the concerns of foreign investors and clarifies many issues from an administrative regulation standpoint. Its implementation will further reduce the cost of comprehensive financing for small and micro businesses.

Firstly, domestic and foreign enterprises will be treated equally. It provides for equal treatment in project declarations, land supply, tax exemptions and qualification. Foreign-capital enterprises shall participate in the formulation and revision of national, industrial and local standards on an equal footing in accordance with the law. The government and its relevant departments shall not restrict the access of foreign-capital enterprises to the government procurement market or exercise differential or discriminatory treatment.

Secondly, investment protection is strengthened. It has been made clear that the state does not charge a levy on foreign investment. If special circumstances require the levy for public interests, the expropriation shall be conducted in accordance with legal procedures and provisions and compensation shall be made according to the market value. It is prohibited to use administrative license, administrative penalty or other means to force foreign investors or foreign-capital enterprises to transfer technology. A local government and its relevant departments shall not, on the grounds of regional adjustment, change of government or change of persons in charge, break any policy commitment or contract entered into in accordance with the law. The people's governments at or above the county level and their relevant departments shall, in accordance with the principles of openness, transparency, efficiency and convenience, establish and improve the complaint handling procedures for foreign-capital enterprises by designating departments or institutions to handle complaints and make known the rules for handling such complaints and the time limit for handling them.

Third, the competent authorities shall not set discriminatory requirements on foreign investors in terms of licensing conditions, application materials, auditing procedures, time limits when examining and approving access permits for relevant industries and fields.

Fourth, it will clearly stipulate the legal liabilities and punishment for not treating foreign-capital enterprises equally according to law, illegally restricting foreign-capital enterprises from participating in the formulation of standards on an equal footing, failing to fulfill policy commitments, and compulsory transfer of technology.

Fifth, we made it clear that investment by those in Hong Kong and Macao in the mainland should be implemented with reference to the foreign investment law and the regulations. Investment by Taiwanese investors in the mainland shall be governed by the investment protection law of Taiwan compatriots and the detailed rules for its implementation. The implementation of the foreign investment law and the regulations is an opportunity to create a fair market environment with non-discriminatory and fair competition among Chinese and foreign enterprises, including those from Hong Kong, Macao and Taiwan.

Implementation regulations of foreign investment law of the People's Republic of China:

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