SINGAPORE - China has started formulating supporting regulations for its new foreign investment law, and these will be implemented simultaneously with the new law in January next year, said Minister-Counsellor Zhong Manying of the Chinese Embassy in Singapore.
At a sharing session about China's business environment on Wednesday (April 17), Ms Zhong stressed that China has "extensively solicited opinions from foreign investors, foreign commerce chambers and foreign-invested companies" when drafting the new law.
But some have criticised it for being short on specifics.
The law, which was given the green light at China's annual parliamentary session last month, aims to address long-standing grievances by foreign businesses, and comes amid talks with United States officials to end a trade war that has cost both sides billions of dollars.
It will eliminate the requirement that foreign enterprises transfer proprietary technology to Chinese joint-venture partners, protect against "illegal government interference" and is also set to abolish a case-by-case approvals process for foreign investments.
This means foreign investors are to enjoy the same privileges as Chinese companies in most sectors, except areas placed on a "negative list" covering those off-limits to non-state businesses or which require them to undergo an application and approval process.
But sceptics have said the law, which was pushed through at an unprecedented rate, appeared to be aimed at mollifying American trade negotiators as China and the US move closer to a trade deal.
Some say its broad terms and vague language read more like policy commitments than binding legal clauses.
At the event in the Singapore Business Federation (SBF) Centre, Ms Zhong said the new law emphasises following the rules, aims to create a fair business environment, strengthens foreign investment protection and largely stands in line with international rules.
She added that work has started on the supporting regulations that will complement the broad framework.
However, specifics of the supporting regulations, which are to be ready by year-end, will not be announced ahead of Jan 1, 2020, she told reporters on the sidelines of the event.
In a speech, Ms Zhong also highlighted the important contributions of foreign investment to China's economic development in its 40 years of reform and opening up, adding that China will still need to learn the technology, management and advanced experience of foreign-invested enterprises in order to achieve "high-quality development" in the future.
As of end-2018, there were over 960,000 foreign-funded companies in China, using US$2.1 trillion (S$2.8 trillion) in foreign investment.
On Wednesday, SBF chairman Teo Siong Seng said that there is strong interest in the new foreign investment law, adding that it "reflects the commitment of the Chinese government to economic liberalisation".
With Singapore's close cooperation with the Chinese government, including its ongoing involvement in the Chongqing Connectivity Initiative, he added that trade relations between both parties stand on a "strong foundation".
A rising number of large and small companies entering each other's markets, as well as growing collaboration in third party markets, also suggest that "prospects for future cooperation are limitless", he said.
"After the Global Financial Crisis of 2008, China has played an increasingly important role in world economic growth and stability," he said.
"China's reform and opening up has unleashed the enormous potential in its economy... It has enabled countries and enterprises around the world, including Singapore, to capitalise on China's growth.
"A more stable, transparent and predictable business environment in China gives more confidence to Singaporean investors, and will bring more opportunities for Singapore businesses," said Mr Teo.
Participants at the event said they welcome the new foreign investment law.
Among them is Mr Jeffrey Lee, chief financial officer of CrimsonLogic, who said it promotes a positive business environment that will encourage more foreign investors to enter the Chinese market.
His company's subsidiary, Global eTrade Services, is already "actively establishing trade connectivity through its Calista platform to drive a global supply chain and trade facilitation services in China".
Mr Huang Xuhua, head of China practice at law firm Allen & Gledhill, expects that foreign investment in China will rise, given that the new law is expected to be accompanied by a relaxation in administrative measures in the coming year.
But he noted that the new law, while important, remains rather general at the moment.
Others such as Mr Chia Kim Huat, regional head of Rajah & Tann's corporate and transactional group, said the revamp of the foreign investment regime has been in the works for several years and the passing of the new law was rushed in the midst of the US-China trade dispute.
He, too, added that the law is "lacking details in several aspects".
"We expect detailed implementation rules to be rolled out over the next few months before the law comes into effect... Nevertheless, China has sent out a clear and positive message that it continues to welcome and encourage foreign investment, and endeavours to create a more level playing field and improve the ease of doing business in China," he said.