China’s New Foreign Investment Law


May 7, 2019

On March 15, 2019, the National People’s Congress (the “NPC”) of the People’s Republic of China (the “PRC” or “China”) passed the Foreign Investment Law (the “New FIL”). Before the New FIL’s passage, China’s government had previously published two draft versions of the Foreign Investment Law for public comment. China’s Ministry of Commerce (“MOFCOM”) published the first draft on January 19, 2015 (the “2015 Draft FIL”), the provisions of which we summarized in a prior China Regulation Watch. The NPC published the second draft on December 26, 2018 (the “2018 Draft FIL”). The legislators signification reduced the amount of content in the New FIL (and the 2018 Draft FIL) when compared with the 2015 Draft FIL (from 11 chapters and 170 articles to 6 chapters and 42 articles). Key content in the New FIL include definitions for “foreign investors” and “foreign investments,” along with regimes for foreign investment management, promotion and protection. Based on available public information, the legislative process for the Foreign Investment Law was on hold for more than three years between the two drafts of the law. This raises questions about whether the 2018 Draft FIL’s release was motivated by the ongoing China and U.S. trade tensions, with the hope that some provisions of the New FIL might be viewed favorably by U.S. trade negotiators.

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