NEW Foreign Law in China, Starting Today!

Source: JobTube, Arianna J., Freya W., Josh B.

The Foreign Investment Law of the PRC is formally implemented as of January 1, 2020. The law is based on a management system of pre-entry national treatment plus a negative list, aiming to reconstruct the management system of foreign investment in China.

Previously, the Judicial Interpretation of The Foreign Investment Law (hereinafter referred to as the judicial interpretation) was adopted at the 1787th session of the judicial committee of the Supreme People's Court on December 16, 2019, and comes into force as of January 1, 2020.

Luo Dongchuan, vice president of the Supreme Court, introduced at the press conference that the foreign investment law has made uniform provisions on the entry, promotion, protection and management of foreign investment, which is a new basic law in the field of foreign investment in China.

As per Article 4, the State maintains a system of pre-entry national treatment plus a negative list management for foreign investment.

The Negative List is a list of industries in which foreign investment is either prohibited or restricted through joint ventures with Chinese companies or are restricted through shareholding limits.

"From the perspective of previous judicial practice, contract disputes are more prominent in disputes in the field of foreign investment.

Therefore, this judicial interpretation focuses on the settlement of contract disputes, especially the determination of the effectiveness of contracts." Luo Dongchuan said.

According to reports, the judicial interpretation implements the principle of openness and equality and protects the legitimate rights and interests of Chinese and foreign investors.