Foreign businesses sceptical as China approves new rules

China-US trade war: New Chinese law seeks to address concerns

Could China's Foreign Investment Law Appease Trump?

Politicians in China have passed a new law loosening regulation on foreign investment, in what is being seen by market watchers as a move to appease Washington in the country's ongoing trade war with the United States.

The new law clearly bodes well for foreign investors, especially in terms of market access and equal treatment, said Mario Ohoven, president of the German Association for Small and Medium-sized Businesses.

But some argue it does not fully address the concerns foreign firms have about doing business in China.

The official Xinhua News Agency said China's economy czar, Vice Premier Liu He, talked by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. "No, the foreign investment law will not lead to a level playing field for foreign firms and investors", Victor Shih, an associate professor of political economy at the University of California in San Diego, told DW.

"Enforcement will be the key metric for evaluating success, but the business community has collectively advocated for years for the Chinese government to impose criminal penalties for infringement, we need to recognise this positive progress to that end".

To consolidate information control, Xi's leadership also limited access by foreign journalists to ruling party and government officials during the opening of the latest parliamentary session.

Parker was quoted by South China Morning Post as saying: "We've reviewed the final draft of the and are pleased with the last-minute addition of new language to further protect foreign company commercial information and trade secrets". "We have to prepare more and we have reserved policy room [to address uncertainties]", Li told a news conference after the annual parliament meeting ended.

"The vague language leaves much room for interpretation and makes compliance hard", he added.

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Some law experts and business consultants have expressed scepticism about how effective the law will be in protecting foreign firms from compelled technology transfers, given a lack of rule of law in China.

Li also sought to soothe concerns that the tax cuts soon rolled out by the government will weigh on local finances, promising the central government will offer support to provinces in central and western China via payment transfers.

The American Chamber of Commerce in China, in a statement earlier this week, said that it in principle welcomed and appreciates "this legislative effort to improve the foreign investment climate".

But it added that it was concerned that "such an important and potentially far-reaching piece of legislation will be enacted without extensive consultation and input from industry stakeholders".

Meanwhile, Lianghui or the Two Sessions concluded here Friday.

It was unclear whether the measure would mollify U.S. President Donald Trump, who launched the tariff war by raising U.S. duties on Chinese imports in response to complaints Beijing steals or pressures companies to hand over technology.

It noted then that 19 percent of its companies were adjusting supply chains or seeking to source components and assembly outside of China as a result of tariffs. "I believe that this is also the expectation of the world", Li said.

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