China's national legislature on Friday passed the foreign investment law in Beijing on March 15, 2019.  This landmark legislation aims to provide stronger protection and a better business environment for overseas investors.

With unified provisionsfor the entry, promotion, protection, and management of foreign investment, it is a new and fundamental law for foreign investment in China.

It aims to improve the transparency of foreign investment policies and ensure that foreign-invested enterprises participate in market competition on an equal basis.

Let’s see the main content:

1. Identity of foreign investment

foreign investment refers to investment activity within the territory of China，directly or indirectly conducted by foreign natural persons, enterprises and other organizations (the "foreign investors"), including the following circumstances:

1) a foreign investor establishes a foreign-funded enterprise, independently or together with any other investor; and

2) a foreign investor acquires shares, equities, property shares or any other similar rights and

interests of an enterprise within the territory of China; and

3) a foreign investor invests in any new construction project, independently or together with any other investor; and

4) other foreign investment within the territory of China in any other way stipulated under laws, administrative regulations or provisions of the State Council.

The above mentioned foreign-funded enterprise refers to an enterprise incorporated under Chinese laws within the territory of China and with all or part of its investment from a foreign investor.

2. Market Entry

The State shall implement the management systems of pre-establishment national

treatment and negative list for foreign investment; save as otherwise provided under international treaties or agreements that the People's Republic of China concludes or joins in, such provisions shall prevail.

For the purpose of the preceding paragraph, the negative list refers to special administrative measures for access of foreign investment in specific fields as stipulated by the State. The negative list will be issued by or upon approval by the State Council.

3. Investment Protection

The State shall protect foreign investors' investment, earnings and other legitimate rights andinterests within the territory of China according to the law.

4. Standardization Work

Foreign-funded enterprises shall equally participate in standardization work, and

information disclosure and social supervision shall be reinforced for the formulation of standards.

The compulsory standards formulated by the State shall equally apply to foreign-funded enterprises.

5. Government Procurement

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6. Intellectual Property Rights Protection

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7. Effective Date

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