China Passes New Laws For Easing Foreign Investment In The Country

A new law to facilitate easier foreign investments in China was passed by Beijing this week. Many analysts see the move by Beijing to be one that was undertaken to actually ease the United States and facilitate the trade talks that is currently holding with the US.

The new law was passed on the final day of the National People’s Congress (NPC) and was overwhelmingly voted in favour of the law by the assembled delegates

Many analysts view the move be Beijing to be a move to pacify the US and especially US president Donald Trump so that the trade talks that the two countries are currently holding continue to run smoothly and they ultimately manage to arrive at a final agreement on trade.

However the critics of the new law claim that the concerns that the foreign firms have about doing business in China are not completely addressed by the new bill.

Delegates at the NPC – the annual meeting of China’s legislature – passed the bill with 2,929 in favour, eight against and eight abstentions. The new regulation is slated to come into effect from January 1 of 2020.

Many however are amazed at the pace at which the new regulation pas brought in and ultimately passed. The first draft of the new law was first issued by Beijing just three months ago. Considering the pace of reforms and enactment of new laws in China, this new regulation becoming a law in just three months is very significant. This fast pace, many say, is also because of the pressure on Beijing from the trade war with the US.

It has been almost eight months now that the US and China have been engaged in an acrimonious trade war with both side imposing import tariffs on each others’ goods worth billions of dollars. In December last year, Trump and Chinese president Xi Jinping agreed to a 90 day truce to the trade war to discuss trade disputes and possibly come up with a trade deal. The deadline was later extended by both the countries because of the positive movement of the trade negotiations.

This new law is being viewed by many in the business community in China to be a signal of the intentions of China about opening up its market and economy to foreign companies instead of it being a sweeping set of economic reforms and a set of enforceable rules. They fear it could be open to different and changing forms of interpretation.

A more level playing field between domestic and foreign businesses is sought to be created by the new law.

Earlier in the week, the American Chamber of Commerce in China welcomed the “legislative effort to improve the foreign investment climate” in a statement.

However is also said some of the provisions were “still quite general and do not address a number of the persistent concerns of foreign companies or foreign-invested enterprises in China”.

(Adapted from BBC.com)

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Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized

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