China has passed a new foreign investment law designed to smooth the way to a new trade deal with the United States.
The Foreign Investment Law passed the National People’s Congress on Friday with 2,929 votes for, eight against and eight abstentions.
Beijing hopes the law will soothe foreign businesses’ concerns and keep investment dollars flowing in, as its economy slows. It grants foreign companies equal standing with China’s state-owned firms and establishes a “negative list”, meaning that any sectors that aren’t declared closed are automatically open.
The foreign business community has complained that the law leaves out many details compared with the original, 2015 version drafted by the Ministry of Commerce, opening the door to hidden impediments being written into the more detailed implementing regulations.
The law “is a much shorter and more general version and that leaves a lot of questions,” said Les Ross, partner at WilmerHale in Beijing. “It seems to have been rushed forward in an effort to show sincerity in trade negotiations.”
Members of the committee involved in drafting the law appeared to have been taken aback by the business community’s criticism, Mr Ross added.