According to president of European Union Chamber of Commerce in China, Jörg Wuttke, the preliminary appearance of China’s new foreign investment law shows that it is fairly accommodating to foreign companies keen to do business in the country. This law which is scheduled to take effect from 1st Jan onwards has put a strong emphasis on preventing Chinese firms from forcing foreign investors to share valuable information about technology to carry out business in the country.
Wuttke also affirmed that this law protects trade secrets of firms that are keen to do business in China. If these bylaws are implemented it can address two major complaints that USA has against China and has cited in the trade dispute. The US-China Business Council has affirmed that it too has received a copy of “Draft Implementing Regulations of the Foreign Investment Law”.
According to Senior VP of US-China Business Council, it is good that China has approached several foreign firms and associations to consult in the review process of this law as it contains encouraging areas for development. But he listed some areas of concern in the draft.
The draft falls short of specifying which trade disclosure will be prohibited and does not clarify details of administrative departments the technology transfer provisions will apply to, vague areas of communication channels between government agencies and foreign entities will be handled and feedback incorporated. It has language that is not enough to allow equal participation for foreign companies, Concerns about fair competition for government tenders between local firms and foreign companies.
When the foreign investment law was passed during an annual congress in March a few business leaders worried that these new rules were turning into law very quickly and contained vague statements which could make enforcement difficult. Analysts also pointed out that challenges for foreign businesses operating in China are based on issues of state control that has increased even though efforts were made to reduce it.