China’s New Foreign Investment Law

Over the last four decades,the People’s Republic of China has sustainably been liberalizing its foreign investment policies,gradually offering investors from around the world more access to its extensive territory rich in resources and to its considerable workforce especially since it entered the WTO in 2001.In such a context,the 1980’s laws governing foreign-invested enterprises in China seemed outdated;and on 1st January 2020,the People ’s Republic of China Foreign Investment Law became effective,thus superseding and repealing the previous laws.Pre-existing foreign-invested companies now have five-years to comply with the new law,upon which they will be governed by the PRC Company Law.The law itself is a game-changer for foreign investors as it addresses many concerns they have voiced in the past.With pre-entry national treatment and negative list as its leading principles,the law promises to facilitate investment,protect intellectual property and streamline processes in a bid to further open up the Chinese market.It also plans to improve existing foreign investment management systems such as the information reporting system and national security review while implementing new ones like a punitive damages system for intellectual property infringement.Nonetheless,pre-existing foreign-invested enterprises are sure to face complex challenges during the five-year transition.The aim of this research is to help future foreign investors understand the law and its complexities,and attempt to define possible guidelines for pre-existing foreign-invested enterprises as they strive to become compliant.This thesis will firstly focus on the contemporary backdrop against which the Foreign Investment Law saw the day;looking at the current global context and key developments in and around China that help understand how the law came to be.The focus will then turn to the law itself,analyzing it alongside its supporting regulations to find out how the government intends to promote,protect and manage foreign investment in China.A comparative study of the previous laws governing foreign-invested enterprises in China and the PRC Company Law will follow,before the main issues foreign investors and foreign-invested enterprises are likely to face during the five-year transition are highlighted and potential solutions are provided.