German Chamber of Commerce in China: Stance on Foreign Investment Law

The German Chamber of Commerce in China welcomes and appreciates the Chinese government’s efforts in reforming its foreign investment regime by unifying into a single law the three current legal foundations that govern foreign investment. We recognize the final version of the Foreign Investment Law as China’s commitment to further open up and, to promote a more transparent and fair regulatory framework for foreign investments. Furthermore, we acknowledge that China’s lawmakers took into account some of the German Chamber of Commerce in China’s comments.

However, the law still distinguishes between domestic and foreign investment. “Instead of a new Foreign Investment Law, we would like to see an investment law that applies equally to all companies registered in China and makes the existence of a law regulating foreign investments redundant”, said Jens Hildebrandt, Executive Director & Board Member of German Chamber of Commerce in China - North China.

While the law addresses many of the issues the German Chamber of Commerce in China has been continuously raising for years such as regulatory barriers to market access, standardization, forced technology transfer, intellectual property rights protection and enforcement, as well as public procurement, the wording used is still very vague. The use of indeterminate legal terms leaves room for interpretation and may lead to legal uncertainty. A large part of the specific reform steps will only be determined by the implementing provisions. Yet, German companies need reliable and transparent framework conditions. “We will continue to closely monitor the implementation of this important law”, added Jens Hildebrandt.