FOREIGN INVESTMENT LAW:A SUMMARY OF CHANGES TO DRAFT VERSIONS

A new and fundamental law for China's foreign investment, the Foreign Investment Law of the People's Republic of China was adopted at the second session of the 13th National People's Congress of China on March 15, 2019 and will come into force on January 1, 2020. The final version of the law contains eight changes from its draft versions:

1. Both products and services are included in government procurement

Revised text: The State guarantees that foreigninvested enterprises can participate in government procurement on a level playing field according to law. Products manufactured and services provided by foreign-invested enterprises within China shall be treated equally according to law in the process of government procurement.

2. Echoing China's administrative reform featuring streamlining administration, delegating power,strengthening regulation and improving services

Revised text: The people's governments at all levels and other relevant government departments shall, in accordance with the principles of convenient, efficient and transparent administration,simplify procedures, improve efficiency, optimize government services and further improve foreign investment services.

3. Emphasis on legal liability for infringement on intellectual property rights

Revised text: The State protects the intellectual property rights of foreign investors and foreigninvested enterprises and the legitimate rights and interests of intellectual property rights owners and relevant persons. Any infringement on intellectual property rights shall assume legal liability according to law.

4. Clarifying that administrative staff shall not disclose business secrets

Article 23 was added to stipulate that administrative organs and their staff shall protect confidential business information of foreign investors and foreign-invested enterprises that is known during performance of their duties, and shall not disclose or illegally provide the information to others.

At the same time, it is added in the section on legal liability that any administrative staff who discloses or illegally provides confidential business information that is known to them in the course of performing their duties shall be punished according to law. Any administrative staff who commits a crime shall be investigated for criminal responsibility according to law.

5. Modification of article concerning chambers of commerce and business associations

Revised text: Foreign-invested enterprises can establish and voluntarily join chambers of commerce and associations according to law. Chambers of commerce and business associations shall carry out activities in accordance with relevant laws, regulations and provisions and safeguard the legitimate rights and interests of members.

6. Activities of foreign-invested enterprises are also governed by other laws

Revised text: Forms of organization, organization structures and activities of foreign-invested enterprises shall be governed by the provisions of the Company Law and the Law of the Partnership Enterprise of the People's Republic of China.

7. Clarifying that foreign-invested enterprises should protect the rights and interests of employees

Foreign-invested enterprises shall abide by laws and administrative regulations on labor protection and social insurance. This line was added to the original article: “Foreigninvested enterprises that engage in production and business operation shall handle such matters as taxation, accounting and foreign exchanges in accordance with relevant laws, administrative regulations and relevant State regulations.”

8. The State Council is authorized to formulate specific implementation measures for foreign-invested enterprises in transition

Revised text: Foreign-invested enterprises that were established before the implementation of this Law and in accordance with the Law on Chinese-Foreign Equity Joint Ventures,Law on Foreign-Capital Enterprises and Law on Chinese-Foreign Contractural Joint Ventures of the People's Republic of China may retain the original business organization form for five years after implementation of this Law. Specific implementation measures shall be prescribed by the State Council.