China eyes easing foreign investment rules ahead of US trade talks

VIDEO: REUTERS
File photo showing a Chinese flag in front of the financial district of Pudong in Shanghai.
File photo showing a Chinese flag in front of the financial district of Pudong in Shanghai.PHOTO: REUTERS

BEIJING (AFP) - Foreign investors in China would be treated largely the same as local rivals under a revised draft law, state media said on Tuesday (Jan 29), as Beijing looks to address a key concern in its trade war with the US.

Washington and other Western powers have been clamouring for better access to Chinese markets and complained about steep government subsidies to local companies that tilt the playing field in their favour.

If approved, the legislation would bar local governments from restricting market access to foreign firms, except "under particular circumstances and in the public interest", official state news agency Xinhua reported.

Some industries would be excluded under the revised draft law, Xinhua said, though it is not clear which ones.

The legislation is being considered at a two-day session of China's legislature, the Standing Committee of the National People's Congress, which began on Tuesday.

It would replace three existing laws on Chinese and foreign equity joint ventures, non-equity joint ventures and wholly foreign-owned enterprises, Xinhua said.

The announcement comes as China's top trade negotiator Liu He arrived in Washington for high-stakes trade talks.

 
 
 

China and the US have a month remaining in a trade war truce declared in December before US tariffs on hundreds of billions in Chinese exports are due to increase sharply.

The tariffs have weighed on China's slowing economy, which last year posted its weakest performance in 30 years.

The new draft legislation would also offer protections against local governments confiscating foreign-owned property without following proper legal procedures.

The first draft of the foreign investment laws was submitted to the Chinese legislature in December.

They have been updated to include regulations governing anti-trust probes on mergers and acquisitions by foreign businesses as well as penalties for failing to report their investment information to government authorities.