Page 84 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
No. 318 Letter of the Ministry of Commerce), foreign investment is presently being developed
currently the Foreign Investment Information as are various systems for rating the financial and
Reporting System that was initially established in other reliability of persons and organizations.
China is mainly for foreign-invested enterprises While we shall not discuss the regulation that is yet
and their investors to report to commercial to be developed, questions remain to be resolved
departments their establishment and change of as to how intrusive this information will be and
information, and to submit annual investment and whether it can be abused.
business information to said departments.
The Foreign Investment Law, Article 38,
In this regard, the Shanghai Municipal emphasizes the responsibilities that shall be
Commission of Commerce and the Shanghai assumed by foreign investors and foreign-invested
Municipal Industry and Commerce Bureau kicked enterprises for breach of laws and regulations, and
off experiments on information sharing on June such breach will be listed in the Credit Information
30, 2018, and set up and implemented “one form, System.
one set of procedures” for business filing and
registration of foreign-invested enterprises that Section 7. National Treatment and
do not involve special management measures for Transition Period for Prior Foreign
foreign investment admission. However, due to Investments
the communication issues of systems between the
two departments, in the course of operations, they The Foreign Investment Law Article 407 literally
still handle cases separately, although the purpose provides national treatment for foreign investors
of the procedures was to eliminate the need for and the same management for domestic invested
double reporting. Therefore, the feasibility of enterprises and foreign-invested enterprises.
the second paragraph of this Article still relies However, given that the trade frictions keep
on supporting regulations and policies issued occurring in recent years, where some countries
by governments and construction of the sharing can discriminatory place tariffs on Chinese foreign
system in the future. investments or goods, this Article specifically
makes countermeasures lawful.
The Foreign Investment Law Article 356 provides
that China shall establish a security review system The Foreign Investment Law Article 428 provides
for foreign investment. With regard to the security that the foreign-invested enterprises established
review of foreign investment, currently China prior to the effect of the Foreign Investment Law
has only provided several regulations in the may continue in its original form for a five-year
Notice of the General Office of the State Council on term. Therefore, existing cooperative enterprises,
Establishment of Security Review System for Mergers
and Acquisitions of Domestic Enterprises by Foreign 7 Article 40 of the Foreign Investment Law reads, “if any country
Investors ([2011] No. 6 Document of the General or region adopts discriminatory prohibitions, restrictions or
Office) and the Notice of the General Office of the other similar measures against the People’s Republic of China in
State Council on Issuance of Trial Measures for the respect of investment, the People’s Republic of China may take
National Security Review on Foreign Investment in corresponding measures against that country or region in accor-
Free Trade Pilot Zones ([2015] No. 24 Document of dance with the actual situations.”
the General Office). The security review system for 8 Article 42 of the Foreign Investment Law reads, “This law shall
come into effect on 1st January 2020. The Law on Chinese-Foreign
6 Article 35 of the Foreign Investment Law reads, “The State shall Joint Ventures of the People’s Republic of China, Law on For-
establish a security review system for foreign investment and eign-Owned Enterprises of People’s Republic of China, or Law on
conduct security reviews of foreign investment that affect or may Chinese-Foreign Cooperative Enterprises of People’s Republic of
affect national security. China are to be abolished at the same time.
The decisions of the security review made pursuant to laws are Foreign-invested enterprises that have been established in
final decisions." accordance with the Law on Chinese-Foreign Joint Ventures of
People’s Republic of China, Law on Foreign-Owned Enterprises of
People’s Republic of China, or Law on Chinese-Foreign Coopera-
tive Enterprises of People’s Republic of China prior to implemen-
tation of this law, may remain in their original corporate forms of
organizations and so forth for five years after the implementation
of this law. The specific implementation measures are to be made
by the State Council.”
84
No. 318 Letter of the Ministry of Commerce), foreign investment is presently being developed
currently the Foreign Investment Information as are various systems for rating the financial and
Reporting System that was initially established in other reliability of persons and organizations.
China is mainly for foreign-invested enterprises While we shall not discuss the regulation that is yet
and their investors to report to commercial to be developed, questions remain to be resolved
departments their establishment and change of as to how intrusive this information will be and
information, and to submit annual investment and whether it can be abused.
business information to said departments.
The Foreign Investment Law, Article 38,
In this regard, the Shanghai Municipal emphasizes the responsibilities that shall be
Commission of Commerce and the Shanghai assumed by foreign investors and foreign-invested
Municipal Industry and Commerce Bureau kicked enterprises for breach of laws and regulations, and
off experiments on information sharing on June such breach will be listed in the Credit Information
30, 2018, and set up and implemented “one form, System.
one set of procedures” for business filing and
registration of foreign-invested enterprises that Section 7. National Treatment and
do not involve special management measures for Transition Period for Prior Foreign
foreign investment admission. However, due to Investments
the communication issues of systems between the
two departments, in the course of operations, they The Foreign Investment Law Article 407 literally
still handle cases separately, although the purpose provides national treatment for foreign investors
of the procedures was to eliminate the need for and the same management for domestic invested
double reporting. Therefore, the feasibility of enterprises and foreign-invested enterprises.
the second paragraph of this Article still relies However, given that the trade frictions keep
on supporting regulations and policies issued occurring in recent years, where some countries
by governments and construction of the sharing can discriminatory place tariffs on Chinese foreign
system in the future. investments or goods, this Article specifically
makes countermeasures lawful.
The Foreign Investment Law Article 356 provides
that China shall establish a security review system The Foreign Investment Law Article 428 provides
for foreign investment. With regard to the security that the foreign-invested enterprises established
review of foreign investment, currently China prior to the effect of the Foreign Investment Law
has only provided several regulations in the may continue in its original form for a five-year
Notice of the General Office of the State Council on term. Therefore, existing cooperative enterprises,
Establishment of Security Review System for Mergers
and Acquisitions of Domestic Enterprises by Foreign 7 Article 40 of the Foreign Investment Law reads, “if any country
Investors ([2011] No. 6 Document of the General or region adopts discriminatory prohibitions, restrictions or
Office) and the Notice of the General Office of the other similar measures against the People’s Republic of China in
State Council on Issuance of Trial Measures for the respect of investment, the People’s Republic of China may take
National Security Review on Foreign Investment in corresponding measures against that country or region in accor-
Free Trade Pilot Zones ([2015] No. 24 Document of dance with the actual situations.”
the General Office). The security review system for 8 Article 42 of the Foreign Investment Law reads, “This law shall
come into effect on 1st January 2020. The Law on Chinese-Foreign
6 Article 35 of the Foreign Investment Law reads, “The State shall Joint Ventures of the People’s Republic of China, Law on For-
establish a security review system for foreign investment and eign-Owned Enterprises of People’s Republic of China, or Law on
conduct security reviews of foreign investment that affect or may Chinese-Foreign Cooperative Enterprises of People’s Republic of
affect national security. China are to be abolished at the same time.
The decisions of the security review made pursuant to laws are Foreign-invested enterprises that have been established in
final decisions." accordance with the Law on Chinese-Foreign Joint Ventures of
People’s Republic of China, Law on Foreign-Owned Enterprises of
People’s Republic of China, or Law on Chinese-Foreign Coopera-
tive Enterprises of People’s Republic of China prior to implemen-
tation of this law, may remain in their original corporate forms of
organizations and so forth for five years after the implementation
of this law. The specific implementation measures are to be made
by the State Council.”
84
