Course tentatively charted to market liberalization – The new Foreign Investment Law of the People’s Republic of China

Abstract

The Foreign Investment Law adopted on 15 March 2019 represents the conclusion of the reform of China’s foreign investment regime, a scheme which was largely put into place in the 1980s. As early as 2015 a first draft was put forward by the Ministry of Commerce. After some of its provisions were transferred into national law, two further – and significantly more streamlined – drafts followed in 2018 and at the beginning of 2019. Adopted in the midst of the recent trade conflict between China and the U.S., the Foreign Investment Law consists of many provisions that may improve the market environment for foreign investors. Its vague wording, however, leaves one in anticipation of future implementing measures. The article argues that the Chinese legislature has, in omitting concrete specifications, created a flexible regime capable of responding to challenges posed in the context of global trade. At the same time, one sees in the legislation certain references to the ongoing trade conflict.