BOFIT Viikkokatsaus / BOFIT Weekly 2019/12

Last Friday (Mar. 15), the National People’s Congress passed a new Foreign Investment Law designed to protect commercial secrets of foreign firms, ban forced technology transfers and assure foreign firms equal access to China’s domestic markets. The new law will enter into force at the start of 2020.

A further revision to the bill added last week says that officials who pass information provided by foreign firms to third parties can be punished. The law complements earlier regulations such as those on free repatriation of corporate profits and other corporate assets. The new law has been criticised for its hasty 12-week preparation and its resulting vagueness. The financial website Caixin reports that the new law will likely be clarified through lower-level regulations and guidelines. Implementation of the law and its monitoring has already become a major trade policy issue.

The new law responds to the current trade war and US demands, and replaces three laws enacted during the 1970s and 1980s.