Implementing Regulation for Foreign Investment Law heralding a New Era of Foreign Investment Regime in China
On December 31, 2019, the State Council of China published the Implementing Regulation for the Foreign Investment Law of the PRC (the “FIL Implementing Regulation”). The FIL Implementing Regulation, together with the Foreign Investment Law (the “FIL”), came into force the very next day – January 1, 2020 – heralding a new era of foreign investment regime in China. The key word for the new regime is “national treatment”, replacing “governmental approvals”. The foreign investment vocabulary will also receive an overhaul, concepts such as “Sino-foreign joint venture”, “total investment” and “joint venture contract”, which were specifically used for Sino-foreign joint ventures, will phase out. This long-awaited regulation introduces a new regulatory regime, setting out detailed rules on certain issues touched on by the broad strokes of the FIL. On the other hand, it remains silent on a number of sensitive topics closely watched by the business community. This demonstrates the Chinese government’s commitment to improve overall environment for foreign investment while remaining prudent when facing complicated issues regarding foreign investment regulation, all against the bigger picture of the ever-changing landscape of international relations.