China, January 9, 2020 — cyberinktimes.com — The Chinese government on January 1 launched its new Foreign Investment Law (FIL) which allows it to further open its market and equalized the treatment for foreign businesses competing with local private firms and state-owned enterprises. Ting
Lu, the Managing Director and Chief China Economist, said the landmark
legislation is very exciting and beneficial as it will lessen barriers for
financial firms, thus, open a number of opportunities. “Previously,
manufacturing companies have access to China.
But for financial service
companies, there are a lot of barriers. Now, the Chinese government promised to
take away most of these barriers in the next few years,” he furthered.
FIL,
aside from its twofold aims, also seeks to improve the ease of doing business
across all its regions that have been affected by the rising competition in
ASEAN countries. The
law also replaces 3 older laws and now gears to allow foreign investors to
create business in China without being obliged to tie with local businessmen. But
some foreign firms tend to be wary on the law, with their expectations now set
high, as they have long been dismayed with China’s forbidden promises.
“Our
expectations are quite modest…The longest-standing issues in China do not
concern an absence of legislation, but rather the lack of enforcement and the
breadth of government discretion resulting in selective enforcement,” said
Lester Ross, the Head of American Chamber of Commerce in China. Analysts
said that despite others’ positive claims on the FIL, it still excludes foreign
investors from several sectors like healthcare and publishing.
They
added that the new law leaves numerous loopholes and lacks specific enforceable
set of rules including what penalties would be forced for violating
intellectual property rights. In
line, economist Lu called for better protection for Intellectual Property (IP)
to sustain the world’s second largest economy as a home to advanced
developments. “China
is big and the growth rate is still around six percent.
This is still the
fastest-growing economy in the world. And the economy is just so big that it
will have a lot of business opportunities,” he stressed. The
new FIL is said to be fast-tracked by Chinese lawmakers as it was passed only
three months after being taken back onto their agenda while some legislations actually
take years in the process.
