Foreign Investment Law of China

 2019-03-18  231


Order of the President of the People's Republic of China
(No. 26)
The Foreign Investment Law of the People's Republic of China, as adopted at the 2nd Session of the Thirteenth National People's Congress of the People's Republic of China on March 15, 2019, is hereby issued, and shall come into force on January 1, 2020.
Xi Jinping, President of the People's Republic of China
March 15, 2019
Foreign Investment Law of the People's Republic of China
(Adopted at the 2nd Session of the Thirteenth National People's Congress of the People's Republic of China on March 15, 2019)
Table of Contents
Chapter I General Provisions
Chapter II Investment Promotion
Chapter III Investment Protection
Chapter IV Investment Administration
Chapter V Legal Liability
Chapter VI Supplemental Provisions
Chapter I General Provisions
Article 1 For the purposes of further expanding the country's opening up, vigorously boosting foreign investment, protecting the lawful rights and interests of foreign investors, regulating the administration of foreign investment, propelling the formation of a new pattern of extensively opening up, and promoting the sound development of the socialist market economy, this Law is enacted in accordance with the Constitution.
Article 2 Foreign investment in the territory of the People's Republic of China (hereinafter referred to as “within China”) shall be governed by this Law.
For the purposes of this Law, “foreign investment” means the investing activities within China directly or indirectly conducted by foreign natural persons, enterprises, and other organizations (hereinafter referred to as “foreign investors”), including the following circumstances:
(1) A foreign investor forms a foreign-funded enterprise within China alone or jointly with any other investor.
(2) A foreign investor acquires any shares, equities, portion of property, or other similar interest in an enterprise within China.
(3) A foreign investor invests in any new construction project within China alone or jointly with any other investor.
(4) Investment in any other manner as specified by a law or administrative regulation or the State Council.
For the purposes of this Law, “foreign-funded enterprise” means an enterprise formed and registered within China under the laws of China in which all or part of investment is made by a foreign investor.
Article 3 The state is adamantly committed to the fundamental national policy of opening up, and encourages foreign investors to invest within China according to the law.
The state implements high-level investment liberalization and facilitation policies, establishes and improves the foreign investment promotion mechanisms, and builds a stable, transparent, and foreseeable investment environment with a level playing field.
Article 4 The state applies the administrative system of pre-establishment national treatment plus negative list to foreign investment.
“Pre-establishment national treatment” as mentioned in the preceding paragraph means the treatment accorded to foreign investors and their investments no less favorable to that accorded to domestic investors and their investments at the stage of investment access; and “negative list” as mentioned in the preceding paragraph means a special administrative measure for access of foreign investment in specific fields as imposed by the state. The state accords national treatment to foreign investment outside of the negative list.
The negative list shall be issued by or with the approval of the State Council.
Where any international treaty or agreement concluded or acceded to by the People's Republic of China provides for any more favorable treatment in respect of access of foreign investors, the relevant provisions of the treaty or agreement may apply. 
Article 5 The state protects, according to the law, foreign investors' investment, income, and other lawful rights and interests within China.
Article 6 Foreign investors and foreign-funded enterprises conducting investing activities within China shall abide by the laws and regulations of China, and neither compromise China's national security nor cause damage to the public interest.
Article 7 The commerce department and the investment department of the State Council shall, based on their division of duties, conduct the promotion, protection, and administration of foreign investment; and other relevant departments of the State Council shall, within their respective scopes of duties, be responsible for the promotion, protection and administration of foreign investment.
The relevant departments of a local people's government at or above the county level shall conduct the promotion, protection, and administration of foreign investment according to laws and regulations and the division of duties determined by the local people's government.
Article 8 Employees of a foreign-funded enterprise shall establish a trade union and conduct trade union activities according to the law to protect the lawful rights and interests of employees. A foreign-funded enterprise shall provide support required for activities of its trade union.
Chapter II Investment Promotion
Article 9 The state's various policies to support the development of enterprises shall equally apply to foreign-funded enterprises according to the law.
Article 10 Comments and recommendations from foreign-funded enterprises shall be requested in appropriate manners in the process of development of laws, regulations, and rules relating to foreign investment.
Regulatory documents and adjudicative instruments, among others, relating to foreign investment shall be published in a timely manner according to the law.
Article 11 The state establishes and improves a foreign investment service system to provide foreign investors and foreign-funded enterprises with consultation and services in respect of laws and regulations, policies and measures, and investment project information, among others.
Article 12 The state establishes multilateral and bilateral cooperative mechanisms for investment promotion with other countries and regions and international organizations to enhance international exchange and cooperation in the investment field.
Article 13 As needed, the state establishes special economic zones or implements pilot policies and measures for foreign investment in particular regions to promote foreign investment and expand the country's opening up.
Article 14 As needed for national economic and social development, the state encourages and directs foreign investors to invest in particular industries, fields, and regions. Foreign investors and foreign-funded enterprises may enjoy preferences according to laws, administrative regulations, or the provisions issued by the State Council.
Article 15 The state guarantees that foreign-funded enterprises equally participate in standard development work according to the law, and reinforces information disclosure and public scrutiny in the development of standards.
The compulsory standards developed by the state shall equally apply to foreign-funded enterprises.
Article 16 The state guarantees that foreign-funded enterprises participate in government procurement activities through fair completion according to the law. Products manufactured and services provided by foreign-funded enterprises within China shall be equally treated in government procurement according to the law.
Article 17 A foreign-funded enterprise may conduct financing according to the law by means such as the public offering of stock, corporate bond, and other securities.
Article 18 The local people's governments at and above the county level may develop foreign investment promotion and facilitation policies and measures within their respective statutory powers according to laws, administrative regulations, and local regulations.
Article 19 The people's governments at all levels and their relevant departments shall, under the principle of convenience, efficiency, and transparency, simplify the procedures for and improve the efficiency of transaction of business, and optimize government services, to raise their foreign investment service capabilities to a new level.
Appropriate departments shall develop and publish foreign investment guidelines to serve and facilitate the investment of foreign investors and foreign-funded enterprises.
Chapter III Investment Protection
Article 20 The state expropriates no foreign investment.
Under certain special circumstances, the state may expropriate or requisition the investment of foreign investors in the public interest according to the provisions of laws. Expropriation and requisition shall be conducted under statutory procedures, and fair and reasonable compensation shall be made in a timely manner.
Article 21 A foreign investor may, according to the law, freely transfer into or out of China, in Renminbi or a foreign currency, its contributions made, profits, capital gains, proceeds from disposition of assets, and royalties of intellectual property rights derived from, indemnity or compensation lawfully acquired, and income from liquidation, among others, within China.
Article 22 The state protects the intellectual property rights of foreign investors and foreign-funded enterprises, and protects the lawful rights and interests of owners of intellectual property rights and relevant right holders; and for infringements of intellectual property rights, strictly holds the infringers legally liable according to the law.
The state encourages technology cooperation on the basis of free will and business rules in the process of foreign investment. Technology cooperation conditions shall be determined under the principle of fairness by all investing parties through equal consultation. No administrative agency or its employee may force the transfer of any technology by administrative means.
Article 23 Administrative agencies and their employees shall keep confidential, according to the law, the trade secrets of foreign investors and foreign-funded enterprises to which they have access in performing their duties, and neither divulge nor illegally provide others with such secrets. 
Article 24 In developing regulatory documents involving foreign investment, the people's governments at all levels and their relevant departments shall comply with laws and regulations; and in the absence of any basis in laws and administrative regulations, such documents shall not derogate from the lawful rights and interests or increase the obligations of foreign-funded enterprises, shall not set any market access and withdrawal conditions, and shall not intervene the normal production and distribution activities of foreign-funded enterprises.
Article 25 The local people's governments at all levels and their relevant departments shall fulfill their policy commitments legally made to foreign investors and foreign-funded enterprises and various contracts legally concluded.
Where any policy commitment or provision of a contract needs to be changed in the national or public interest, such change shall be made according to the statutory powers and procedures, and foreign investors and foreign-funded enterprises shall be compensated according to the law for their losses so incurred.
Article 26 The state establishes a working mechanism for complaints of foreign-funded enterprises to address concerns of foreign-funded enterprises and their investors in a timely manner and coordinate and improve the relevant policies and measures.
Where a foreign-funded enterprise or its investor deems that an administrative action taken by an administrative agency or its employee infringes upon its lawful rights and interests, it may, through the working mechanism for complaints of foreign-funded enterprises, apply for coordination to resolve the issue.
Where a foreign-funded enterprise or its investor deems that an administrative action taken by an administrative agency or its employee infringes upon its lawful rights and interests, it may also apply for administrative reconsideration or institute an administrative lawsuit according to the law, in addition to applying for coordination to resolve the issue through the working mechanism for complaints of foreign-funded enterprises.
Article 27 Foreign-funded enterprises may legally form and voluntarily join in a chamber of commerce or association. A chamber of commerce or association shall conduct relevant activities according to laws, regulations, and its articles of association to protect the lawful rights and interests of its members.
Chapter IV Investment Administration
Article 28 A foreign investor may not invest in a field which is prohibited by the foreign investment access negative list from investment.
To invest in a field restricted by the foreign investment access negative list from investment, a foreign investor shall meet the investment conditions set out in the negative list.
For fields outside of the foreign investment access negative list, investment administration shall be conducted under the principle of equal treatment to domestic and foreign investment.
Article 29 Where any foreign investment needs to undergo the confirmation or recordation of investment projects, the relevant provisions issued by the state shall apply.
Article 30 In industries and fields where foreign investors need to legally obtain permits for their investment, they shall undergo the relevant licensing formalities according to the law.
The appropriate departments shall examine the licensing applications of foreign investors under the same conditions and procedures as for domestic investors, except as otherwise provided for by a law or administrative regulation.
Article 31The business forms, structures, and rules of activities of foreign-funded enterprises shall be governed by the Company Law of the People's Republic of Chinathe Partnership Law of the People's Republic of China, and other laws.
Article 32 In conducting production and distribution activities, foreign-funded enterprises shall comply with the provisions of laws and administrative regulations pertaining to labor protection and social insurance, conduct taxation, accounting, foreign exchange, and other affairs according to laws, administrative regulations, and the relevant provisions issued by the state, and accept the supervisory inspection legally conducted by the appropriate departments.
Article 33 Where a foreign investor participates in the concentration of undertakings by merger or acquisition of enterprises within China or in any other manner, it shall accept a review of concentration of undertakings under the Anti-monopoly Law of the People's Republic of China
Article 34 The state establishes a foreign investment information reporting system. A foreign investor or foreign-funded enterprise shall submit investment information to the commerce department through the enterprise registration system and the enterprise credit information publicity system.
The contents and scope of reporting of foreign investment information shall be determined under the principle of necessity; and investment information accessible by interdepartmental information sharing shall not be required to be submitted again.
Article 35 The state establishes a foreign investment security review system to conduct a security review of foreign investment that impacts or may impact the national security.
A decision legally made upon a security review shall be final.
Chapter V Legal Liability
Article 36 Where a foreign investor invests in a field prohibited by the foreign investment access negative list from investment, the appropriate department shall order cessation of investment activity, disposition of shares and assets or adoption of other necessary measures during a specified period, and restoration to the state before investment; and its illegal income, if any, shall be confiscated.
Where the investment activity of a foreign investor violates any special administrative measure for restrictive access as set out in the foreign investment access negative list, the appropriate department shall order the investor to take corrective action during a specified period and adopt necessary measures to meet the requirements of the special administrative measure; and if it fails to take corrective action during the specified period, the preceding paragraph shall apply.
Where the investment activity of a foreign investor violates the provisions of the foreign investment access negative list, it shall assume the corresponding legal liability according to the law in addition to the application of the preceding two paragraphs. 
Article 37Where, in violation of this Law, a foreign investor or foreign-funded enterprise fails to submit investment information as required by the foreign investment information reporting system, the commerce department shall order it to take corrective action during a specified period; and if it fails to do so, impose a fine of not less than 100,000 yuan nor more than 500,000 yuan on it 
Article 38 The violations of laws and regulations committed by foreign investors and foreign-funded enterprises shall be investigated by the relevant departments according to the law and included in the credit information system according to the relevant provisions issued by the state.
Article 39 Where an employee of an administrative agency abuses powers, neglects duties, practices favoritism, or makes falsification for personal gain during the promotion, protection, and administration of foreign investment or divulges or illegal provides others with any trade secret to which he or she has access in performing his or her duties, disciplinary action shall be taken against the employee according to the law; and if it is criminally punishable, the employee shall be held criminally liable according to the law.
Chapter VI Supplemental Provisions
Article 40 Where any country or region adopts any prohibitive, restrictive or other similar discriminatory measures against the People's Republic of China in terms of investment, the People's Republic of China may adopt corresponding measures against the aforesaid country or region according to the actual circumstances.
Article 41 Where the state has issued any other provisions on foreign investors' investment in the banking, securities, insurance, and other financial industries or the securities, foreign exchange, and other financial markets within China, such provisions shall prevail.
Article 42 This Law shall come into force on January 1, 2020, upon which the Law of the People's Republic of China on Chinese-foreign Equity Joint Venturesthe Law of the People's Republic of China on Wholly Foreign-Owned Enterprises, and the Law of the People's Republic of China on Chinese-foreign Cooperative Joint Ventures shall be repealed.
Foreign-funded enterprises formed under the Law of the People's Republic of China on Chinese-foreign Equity Joint Venturesthe Law of the People's Republic of China on Wholly Foreign-Owned Enterprises, and the Law of the People's Republic of China on Chinese-foreign Cooperative Joint Ventures before this Law comes into force may maintain their original business forms, among others, for five years after this Law comes into force. The specific implementing measures shall be developed by the State Council.