What does the Foreign Investment Law mean for China’s reform and opening up?
Andrew McGinty was interviewed by 21st Century Business Herald, a leading Chinese business news publication, about the impact of China’s foreign investment law (FIL) on the country’s reform and opening up for foreign companies.
Andrew commented, “The FIL will speed China's opening up because it will remove differences in governance and bring the governance of Foreign Invested Enterprises ("FIEs") closer to those of domestic capital enterprises, thus bringing China closer to a single level playing field, regardless of source of capital. However, the FIL by itself is not enough – it needs to be backed up by concrete measures to reduce the number of items on the Special Administrative Measures on the Access of Foreign Investment to China (Negative List) ("Negative List"), which has happened with the latest 2019 version of the Negative List.”
He added, “It is for this reason that it is very important to speed up the promulgation of the implementing regulations under the FIL, to give foreign investors greater certainty as to the legal regime that will govern their companies after the effective date of the FIL, particularly against a background of uncertainty due to trade tensions. Ideally all the main implementing regulations need to be in place before 1 January 2020 as it is very difficult for companies to plan compliance programs and training and for legal professionals to draft and for business people to agree JV documents without knowing 'all four corners' of the legal regime to which they relate.”
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