Overseas investors to be given wider access

Many expect the draft of the new Foreign Investment Law, released by the Ministry of Commerce on Jan 19, to remove major barriers for foreign investors granting them easier access to the Chinese market. In this context, institutional innovations in the draft to improve foreign investment in the country are worth noting.

To begin with, the draft, if it is passed, will replace the existing case-by-case approval system with one in which foreign investors shall enjoy "national treatment", that is, they can make investments on the same terms as Chinese investors without being subjected to approvals or sectoral restrictions, except in areas on the "negative list" (industries in which foreign investment is restricted or prohibited).

Last year China overtook the United States as the world's top foreign investment destination, making a new Foreign Investment Law necessary. Promoting both the "negative list" and national treatment models through legislation, the draft promises to make foreign investment in China simpler and smoother.