Proposed law will make it easier for non-Chinese to invest in China

World Today

Chinese Premier Li Keqiang said China will open more sectors and new free trade zones in the country. The government is also considering a new law that would encourage more foreign investment by ending the practice of approving foreign investment on a case by case basis. CCTV’s Han Peng reported this story from Beijing.

Proposed law will make it easier for non-Chinese to invest in China

Proposed law will make it easier for non-Chinese to invest in China

Chinese Premier Li Keqiang said China will open more sectors and new free trade zones in the country. The government is also considering a new law that would encourage more foreign investment by ending the practice of approving foreign investment on a case by case basis. CCTV's Han Peng reported this story from Beijing.

The government is currently seeking public opinion on the proposed foreign investment law that would use a “negative list” approach to foreign investment instead of a case-by-case approach. Essentially this means that if an industry or activity is not explicitly restricted or prohibited on the negative list, foreign investors can enjoy the same treatment as Chinese investors, according to law firm Norton Rose Fulbright.

The draft law has been released at a time when China has seen the lowest GDP growth since 1990.

“Foreign investment over the past 35 years has really been a great contributor to Chinese economic growth. It is part of the Chinese economy… It is really a strategic approach for China to further streamline the foreign investment legal environment,” professor Liu Boacheng at the University of International Business and Economics said.

The negative list means the government is basically delineating what activities it can intervene in and what is the freedom of businesses, he added.

The changes will make a huge difference to companies that do business in China.

“The obvious thing is there is less bureaucracy. Less bureaucracy means that you have faster approval processes, and if you look at the West perception of China, one of the biggest barriers of entry is bureaucracy,” James Darlington, head of recruiting company Asia Antal international said.

The easing of the restrictions is also expected to bring more small-and-medium-sized foreign companies to China.

China tested the negative list approach when it launched the Shanghai Free Trade Zone more than a year ago, and it now hopes to put the practice in place across the country.