Summary of China’s New Foreign Investment Law

On Friday, March 15, 2019, the National People’s Congress adopted the Foreign Investment Law [外商投资法] by a 2929–8 vote, with 8 abstentions and 3 delegates not voting. Upon taking effect on January 1, 2020, the Law will replace China’s currently fragmented foreign investment regime: three separate foreign investment laws enacted in the early years of China’s economic reform. Our English translation of the new Law is available here.

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Second Draft of Foreign Investment Law: A Summary of Main Changes (UPDATED)

UPDATE (Feb. 18, 2019): The NPCSC apparently did quietly release the full text of the second draft of the Foreign Investment Law on January 29. (So quietly that we could not find the webpage unless we use the website’s search function.) We thank the reader who sent us the link.

We shall start by saying that, no, the NPC Standing Committee (NPCSC) has not released the official second draft of the Foreign Investment Law [外商投资法] that it reviewed in late January. We instead found an unofficial version of the second draft on WeChat—specifically this post by a public account focusing on fiscal and tax issues.[*] After checking this document against state media reports on the second draft, we have every reason to believe that it is authentic.

An English translation of the second draft of the Foreign Investment Law (along with the Chinese original) is now available on China Law Translate.

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NPCSC Adds Special Session for Second Review of Foreign Investment Law (UPDATED)

UPDATE (Jan. 29, 2019): On the morning of January 29, the NPCSC decided to submit the draft Foreign Investment Law to the 2019 NPC session for deliberation (and most certainly adoption). It is unclear at this point whether it will release the second draft of the Law for public comments, but as we argued below, the chance is slim. We very briefly noted the main new provisions in the newest draft on Twitter:

The NPC Standing Committee (NPCSC) conducted an initial review of the draft Foreign Investment Law [外商投资法] last December but took no further action. Readers may recall that we then explained what we saw as the (only) two potential legislative timetables for the Law: It will be adopted by the NPC either this March (after another NPCSC review in late February) or in March 2020 (after a few more readings in 2019). The longer process would not help show China’s willingness to comply with certain demands the United States made during trade negotiations, while the shorter one faces procedural hurdles under Chinese law.

Faced with two imperfect choices, the NPCSC has decided to take an unexpected third approach. It will convene for a special session from January 29 to 30 to conduct a second review of the draft Foreign Investment Law, the Council of Chairmen announced on Wednesday. At the end of the two-day session, the NPCSC will most certainly submit the Law to the NPC, which will then most certainly approve it at its annual session in March.

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NPCSC Takes No Further Action on Foreign Investment Law (for Now), Adopts Two Tax Laws & Codifies Civil Service Reform

The 13th NPC Standing Committee (NPCSC) concluded its seventh session on Saturday with the adoption of a series of laws and decisions. Below we will take a brief look at each.

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NPCSC Solicits Public Comments on Draft Foreign Investment Law (FURTHER UPDATED)

UPDATE 4 (Jan. 2, 2019): For our latest thoughts on the next steps for the Foreign Investment Law, please see this post.

UPDATE 3 (Dec. 27, 2018): We have translated the draft in full on China Law Translate.

UPDATE 2 (Dec. 27, 2018): We revised our prediction about the legislative timetable for the Foreign Investment Law in light of recent state media reports. [superseded by UPDATE 4]

UPDATE 1 (Dec. 27, 2018): We have updated this post with a summary of the latest draft Foreign Investment Law.

The NPC Standing Committee (NPCSC) unexpectedly released the draft Foreign Investment Law [外商投资法] on Wednesday for public comments for an unexpectedly long period—61 days—until February 24, 2019.

The original Chinese PDF of the draft can be accessed here. Our English translation is available here. The accompanying explanation of the draft (in Chinese) can be read here.

To submit comments online, please refer to these instructions. Comments can also be mailed to the NPCSC Legislative Affairs Commission [全国人大常委会法制工作委员会] at the following address:

Chinese: 北京市西城区前门西大街1号 邮编:100805
English: No. 1 West Qianmen Avenue, Xicheng District, Beijing 100805

Please clearly write “外商投资法草案征求意见” on the envelope.

Continue reading “NPCSC Solicits Public Comments on Draft Foreign Investment Law (FURTHER UPDATED)”

NPCSC Session Watch: Foreign Investment, Patent, Resource Tax, Local Government Debt & More

The 13th NPC Standing Committee (NPCSC) will convene for its last session in 2018 from December 23 to 29, the Council of Chairmen decided on Friday. This session is another of those end-of-year, week-long NPCSC sessions that we have come to love (and definitely not hate). We counted 14 legislative bills plus several more decisions and reports on the agenda. And there is absolutely no festivity-related reason why we would rather not work around that period. Because we expect six of those bills to pass on December 29, we will publish summaries of them after the session concludes rather than in this session preview. Here is our rundown on the agenda.

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NPC Calendar: December 2018 (UPDATED)

UPDATE (Dec. 5, 2018): The State Council’s executive meeting, its top decision-making body, approved a draft amendment to the Patent Law [专利法] on Wednesday (December 5). The draft amendment may have replaced a draft revision to the Law that was released for public comments in 2015 for it seems to make similar changes as the draft revision (based on the brief press release of the State Council’s meeting). The NPCSC will likely review the draft amendment at its upcoming session.

The 13th NPC Standing Committee (NPCSC) is expected to convene for its seventh session late this month. The Council of Chairmen is expected to meet in mid-December to decide on the dates and agenda of the session.

According to the NPCSC’s 2018 legislative plan, the following bills have been tentatively scheduled for the upcoming session:

The draft Farmland Occupancy Tax Law [耕地占用税法] and Vehicle Acquisition Tax Law [车辆购置税法] will likely return for their second (and likely final) round of deliberations.

The State Council may also submit for review a draft Vaccine Administration Law [疫苗管理法] (on which it solicited public comments for two weeks in November).

The pilot reform to combine the maternity insurance fund and the basic medical insurance fund will expire on December 31. We expect the State Council to either request an extension of the pilot or submit an amendment to the Social Insurance Law [社会保险法].

The pilot reform that allows the rights to use cultivated land and house sites [宅基地] to be mortgaged will also expire on December 31. The State Council may submit amendments to the Property Law [物权法] and the Guaranty Law [担保法] to codify the reform. Alternatively, it may request yet another extension—the pilot was already extended once for one year in late 2017—until the Civil Code (which will replace those two laws) is enacted.

Another land reform pilot—which allows the transfer of the right to use collectively owned land for construction [集体建设用地使用权]; adjusts the approval authority over house sites; and revises the standards for compensating the expropriation of collectively owned land—will expire, again, on December 31. The State Council will likely submit an amendment to the Land Management Law [土地管理法] and possibly also an amendment to the Urban Real Estate Administration Law [城市房地产管理法] (certain provisions of these two laws are being suspended during the pilot).

Lastly, a pilot reform of the civil service system will expire on January 1, 2019. As the NPCSC is already reviewing a draft revision to the Civil Servants Law [公务员法] that codifies the reform, we expect it to extend the pilot until the revision is adopted.

The NPCSC is also expected to adopt a decision to convene the 2019 NPC session (the 2nd Session of the 13th NPC) at its upcoming meeting.

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NPC Standing Committee Releases 2018 Legislative Plan

The NPC Standing Committee (NPCSC) on Friday released its annual legislative plan for 2018. As usual, the plan is divided into two sections—the first listing specific legislative projects slated for discussion at the NPCSC’s remaining five sessions in 2018, and second setting forth general guiding principles for its legislative work this year. We will discuss only the first part in this post.

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