Promulgation Date: 2019-12-26 Title: Implementation Measures for the Foreign Investment Law Document Number: Fafa (2020) #38令第723号 Expiration date: Promulgating Entities:State Council Source of text: http://www.gov.cn/zhengce/content/2019-12/31/content_5465449.htm
Chapter I: General Provisions
Article 1: These Regulations are drafted on the basis of the "Foreign Investment Law of the People's Republic of China" (hereinafter simply "Foreign Investment Law")
Article 2: The State will encourage and promote foreign investment, protect the lawful rights and interests of foreign investors, standardize the administration of foreign investment, continue to optimize the environment for foreign investment, and advance a higher level of openness to the world.
Article 3: "Other investors" as used in items (1) and (3) of Article 2 of the Foreign Investment Law includes natural persons from China.
Article 4: The State Council departments in charge of investment, together with the State Council deparments in charge of commerce and other relevant departments, are to report the negative list for foreign investment (hereinafter "Negative List") to be published by the State Council, or to be published by the State Council departments in charge of investment and in charge of commerce after approval by the State Council.
As needed for further expanding openness to the world and economic and social development, the state is to adjust the Negative List at appropriate times. The provisions of the preceding paragraph apply to the procedures for adjusting the Negative List.
Article 5: The State Council departments in charge of commerce and investment, as well as other relevant departments, are to follow their duties and divide labor, cooperating closely and mutually collaborating to jointly complete efforts to promote, protect, and manage foreign investment.
Local people's governments at the county level or above shall strengthen organization and leadership of efforts on the promotion, protection, and management of foreign investment; supporting and urging relevant departments to follow laws and regulations, and their duties and division of labor, to carry out efforts on the promotion, protection, and management of foreign investment, and promptly adjust and resolve major problems in the efforts to promote, protect, and manage foreign investment.
Chapter II: Investment Promotion
Article 6: Governments and their relevant departments shall lawfully treat foreign-invested enterprises and domestic-invested enterprises equally in areas such as funding arrangements, land supply, tax relief, qualifications and permits, setting standards, project declarations, human resources policies, and so forth.
Policies formulated by governments and their relevant departments to support the development of enterprises shall be disclosed in accordance with law; and where in the course of policy implementation enterprises are required to apply for matters to be handled, governments and their relevant departments shall disclose the requirements, processes, and time limits for applications, and lawfully treat foreign-invested enterprises and domestic-invested enterprises equally in during review.
Article 7: The drafting of administrative regulations, rules, and normative documents related to foreign investment, or laws and local regulations drafted related to foreign investment that are drafted by governments and their relevant departments, shall employ multiple methods based on actual conditions, such as soliciting written public comments and holding symposia or debates to hear the opinions and recommendations of foreign-invested enterprises and related chambers of commerce, associations, and other parties; and shall use appropriate methods to give feedback on means adopted to address issues on which comments focussed or which involve major rights and interests of foreign-invested enterprises.
Normative documents related to foreign investment shall be promptly published in accordance with law; and where they have not been published, they must not be a basis for management. Normative documents closely related to foreign-invested enterprises' business activities shall consider actual conditions in reasonably determine the time between publication and implementation.
Article 8: All levels of people's government shall follow the principle of government direction with participation from may sides, to establish and complete a foreign investment service system, continuously increasing the capacity and level of services for foreign investment.
Article 9: Governments and their relevant departments shall use government websites and the uniform national online service platform to consolidate and list laws, regulations, normative documents, policy measures, and information on investment programs related to foreign investment, and use multiple channels and methods to strengthen publicity and explanations, providing services such as information and guidance for foreign investors and foreign-invested enterprises.
Article 10: "Special Economic Regions" as used in the Foreign Investment Law refers to specific regions that the state has approved the establishment of, and which implement stronger policy measures for opening to the world.
The state is to implement experimental policy measures for foreign investment in some regions, and where they are shown to be viable in practice, expand their scope to other regions or to the entire nation, in light of actual conditions.
Article 11: Based on the needs of national economic and social development, the State is to draft a catalog of industries in which foreign investment is encouraged, listing specific industries, fields, or regions in which foreign investors are encouraged and guided to invest. The State Council departments in charge of investment, together with the State Council departments in charge of commerce and other relevant departments, are to report the catalog of industries in which foreign investment is encouraged to be published by the State Council, or to be published by the State Council departments in charge of investment and in charge of commerce after approval by the State Council.
Article 12: Foreign investors and foreign-invested enterprises may enjoy preferential treatment in accordance with the provisions of laws, administrative regulations, or the State Council, in areas such as public finance, tax, finance, and land use.
Where foreign investors expand their investments in mainland China with the earnings from their investments in mainland China, they are to lawfully enjoy corresponding benefits.
Article 13: Foreign and domestic invested-enterprises are to participate equally in efforts to draft and revise national standards, industry standards, local standards, and group standards in accordance with law. Foreign-invested enterprises may draft standards as needed, either by themselves or jointly with other enterprises.
Foreign-invested enterprises may submit recommendations for the establishment of standards to the administrative departments in charge of standardization and relevant administrative regulatory departments; may submit comments and recommendations in processes such as the establishment, drafting, or technical review of standards, or during feedback and assessment of standards' implementation; and as provided may undertake efforts related to the drafting of standards or technical review of standards, as well as efforts to translate the standards into foreign languages.
The administrative departments in charge of standardization and relevant administrative regulatory departments shall establish and complete relevant work mechanisms, increasing transparency in the formulation and revision of standards, and advancing information disclosure in the course of drafting and revising standards.
Article 14: Mandatory standards drafted by the state apply equally to foreign and domestic invested enterprises, and there must not be technical requirements specifically applying to foreign-invested enterprises that are higher than the mandatory standards.
Article 15: Governments and their relevant departments must frustrate or restrict foreign-invested enterprises' free entry into the government procurement market in corresponding areas and industries.
Government procurers and procurement agents must not exhibit differential or discriminatory treatment for foreign-invested enterprises in areas such as publication of government procurement information, inspecting supplier requirements and credentials, and bid evaluation criteria; must not restrict suppliers on the basis of unreasonable requirements such as ownership structure, organizational structure, stock structure, investor nationality, or service branding; and must have differentiated treatment for the goods produced in China and services provided by foreign-invested enterprises and domestically-invested enterprises.
Article 16: In accordance with the "P.R.C. Government Procurement Law" (Hereinafter 'Government Procurement Law') and its implementation regulations, foreign-invested enterprises may submit inquiries and questions on government procurement activities to the procurers or procurement agencies and may make complaints to the government procurement oversight departments. Procurers, procurement agencies, and departments for the oversight of procurement shall make a response or a decision on disposition within the time provided.
Article 17: Departments for the oversight and management of government procurement and other relevant departments shall strengthen oversight and inspections of government procurement activities, lawfully correcting and investigating conduct in violation of laws and regulations such as the differential or discriminatory treatment of foreign-invested enterprises.
Article 18: Foreign-invested enterprises may lawfully issue stocks and corporate bonds in China and abroad through publicly disclosed channels, as well conducting financing through means such as other finance tools or borrowing on credit whether or not publicly disclosed.
Article 19: Based on laws, administrative regulations, and local regulations, people's governments at the county level or above may formulate policy measures within the scope of their authority to promote and facilitate foreign investment in areas fee reductions and waivers, land use indicator safeguards, provision of services, and so forth.
Local people's governments at the county level or above's policy measures to promote and facilitate foreign investment shall be oriented towards high-quality development, be advantageous to increasing economic, social efficacy, and ecological efficacy; and be conducive to continuously optimizing the environment for foreign investment.
Article 20: The relevant regulatory departments shall formulate and publish foreign investment guidelines to provide services and facilitation to foreign investors and foreign-invested enterprises. The foreign investment guidelines are to include an introduction to the investment environment, a guidebook for handling foreign investment matters, information on foreign investment projects, as well as relevant data and other such content, and are to be promptly updated.
Chapter III: Investment Protection
Article 21: The state is not to expropriate the investments of foreign investors.
Where in special circumstance the state needs to expropriate foreign investors' investments in the public interest in accordance with laws, they shall follow the legally-prescribed procedures, proceed in a non-discriminatory fashion, and promptly make compensation in accordance with the market value of the expropriated investment.
Foreign investors dissatisfied with an expropriation decision may request an administrative reconsideration or raise an administrative lawsuit in accordance with law.
Article 22: Foreign investors' capital contributions, profits, capital gains, income from asset disposal, intellectual property right royalties that are acquired, compensation or indemnification obtained in accordance with law, liquidation income, and so forth, that are made or obtained in mainland China, may be freely transferred into or out of mainland China in RMB or foreign exchange in accordance with law; and the currency, amounts, and frequency of import or export must not be restricted by any unit or individual.
The salary and other lawful income of foreign-invested enterprises' foreign national staff, and staff from Hong Kong, Macao, and Taiwan, may be freely sent abroad.
Article 23: The state is to increase the force of punishments for infringement of intellectual property rights, continuously strengthen intellectual property rights enforcement, promote the establishment of rapid collaborative protection mechanisms for intellectual property rights, complete diversified dispute resolution mechanisms for intellectual property rights disputes, and give equal protection for foreign investors' and foreign-invested enterprises' intellectual property rights.
Where foreign investors' or foreign-invested enterprises' patents are involved in the drafting of standards, it shall be handled in accordance with the relevant provisions on the management of standards involving patents.
Article 24: Administrative organs (including organizations authorized by laws or regulations to have public affairs management duties) and their staffs must not compel or indirectly compel foreign investors or foreign-invested enterprises to transfer technology through the use of administrative permitting, administrative inspections, administrative punishment, administrative compulsion, as well as other administrative tactics.
Article 25: Where administrative organs lawfully performing their duties truly need foreign investors or foreign-invested enterprises to provide materials or information related to commercial secrets, it shall be restricted to the scope required for performance of the duties, and the scope fo those informed is to be strictly controlled such that personnel who are unrelated to the performance of the duties must not have contact with the materials or information.
Administrative organs shall establish and complete internal management systems, employing effective measures to protect the commercial secrets of foreign investors and foreign-invested enterprises that are learned of during the performance of duties; where the law requires sharing information with other administrative organs, information relating to commercial secrets shall be processed for confidentiality to prevent leaks.
Article 26: Governments and their relevant departments drafting normative documents involving foreign investment shall conduct legality reviews in accordance with State Council provisions.
Foreign investors and foreign-invested enterprises that feel that a normative document drafted by a state council department, local people's government, or its departments, and upon which an administrative action was based, is unlawful, may request a review of the normative document when they apply for administrative reconsideration or raise a lawsuit over the administrative act.
Article 27: "Policy commitments" as used in article 25 of the Foreign Investment Law refers to written pledges made by local governments of all levels and their departments within the scope of their authority, regarding support policies, benefits, and facilitation for foreign investors and foreign-invested enterprises in the corresponding region. The content of policy commitments shall comply with laws and regulations.
Article 28: Local people's governments at all levels and their relevant departments shall perform on policy commitments lawfully made to foreign investors and foreign-invested enterprises as well as on all kind of lawfully concluded contracts; agreements must not be breached or renounced for reasons such as adjustment of administrative regions, government transitions, adjustments to organizations, functions, or personnel responsibilities. Where it is necessary that they change policy commitments or contractual agreements for the national or public interest, they shall proceed in accordance with legally prescribed authorities and procedures and promptly, give fair and reasonable compensation to the foreign investors or foreign-invested enterprises for any loss sustained as a result.
Article 29: People's governments at the county level or above and their relevant departments shall follow the principles of openness and transparency, efficiency and convenience, to establish and complete working mechanisms for complaints by foreign-invested enterprises, promptly handles the issues raised by foreign-invested enterprises or their investors, and coordinates and improves the relevant policy measures.
The competent departments for commerce under the State Council, together with relevant State Council departments, are to establish a joint inter-ministerial conference of complaint work to coordinate and promote central level efforts on foreign-invested enterprise complaints and conduct guidance and oversight of local efforts on foreign-invested enterprise complaints. Local people's governments at the county level or above shall designate the departments or bodies responsible for accepting complaints from foreign-invested enterprises or their investors within that region.
The departments of bodies designated by the competent departments for commerce under the State Council or local people's governments at the county level or above shall improve rules for complaint work, establish sound methods for complaints, and clarify the time periods for addressing complaints. The rules for complaint work, methods for making complaints, and time periods for addressing complaints shall be publicly disclosed.
Article 30: Where foreign-invested enterprises or their investors feel that the administrative acts of administrative organs or their staffs have violated their lawful rights and interests, and apply for coordinated resolution through the foreign-invested enterprises complaint work systems when relevant parties coordinate they may learn or the circumstances from the complained of administrative organs and their staffs, and the administrative organs and their staffs shall cooperate. The applicant shall be promptly informed of the coordinated outcome in writing.
Where foreign-invested enterprises and their investors apply for the coordinated resolution of relevant problems in accordance with the preceding paragraph, it does not impact their lawfully applying for administrative reconsideration or initiating administrative litigation.
Article 31: Where foreign-invested enterprises or their investors report or relevant issues through the foreign-invested enterprises complaint work mechanisms or apply for coordination of a resolution, they must not be suppressed or retaliated against by any unit or individual.
In addition to the foreign-invested enterprises complaint work mechanisms, foreign-invested enterprises and their investors may also give feedback on issues to governments and their relevant departments through other legal methods.
Article 32: foreign-invested enterprises may lawfully establish chambers of commerce and associations. Except as otherwise provided by laws or regulations, foreign-invested enterprises have the right to make their own decisions on participating in or leaving chambers of commerce and associations, and there must be no interference by any units or individuals.
In accordance with laws, regulations, and their charters, chambers of commerce and associations shall strengthen industry self-discipline, promptly giving feedback on industry demands, and providing members with information services, publicity and training, market expansion, exchanges on economics and trade, rights protection, dispute resolution, and other services.
The state encourages chambers of commerce and associations' carrying out of relevant activities in accordance with the provisions of laws, regulations, and charters.
Chapter IV: Investment Management
Article 33: Foreign investors must not make investments in fields in which the Negative List provides that investment is prohibited. Foreign investors making investments in fields where the Negative List restricts invest shall comply with the Negative List's requirements on stock ownership, senior management, and other restrictive special management measures.
Article 34: In the performance of their duties, relevant regulatory departments are not to process permits, enterprise registration, and related matters for foreign investors planning investments in sectors on the Negative List that do not comply with the Negative List; and where fixed asset investment projects are involved, they are not handle reviews.
Relevent regulatory departments shall strengthen oversight and inspections on the implementation of the Negative List, and where it is discovered that foreign investors have invested in sectors prohibitted by the Negative List, or that foreign investors' investment activities violate the Negative List's special management provisions restricting market access, handle it in accordance with article 36 of the Foreign Investment Law.
Article 35: Where foreign investors invest in industries or fields that require permits in accordance with law, except where laws or administrative regulations otherwise provide, the regulatory departments responsible for carrying out permitting shall review foreign investors' applications for permits according to the same requirements and procedures as for domestic capital, must not add discriminatory requirements for foreign investors in areas such as permit conditions, application materials, review steps, or review time.
Relevant regulatory departments that are responsible for implementing permites shall use diverse methods to optimize approval services and increase the efficiency of approvals. Permit matters that meet all conditions and requirements may be handled through means such as information pledges in accordance with relevant provisions.
Article 36: Where the approval or recording of investment projects need to be processed for foreign investment, follow the relevant State provisions.
Article 37: The State Council Department for Market Oversight and Managment, or other authorized local government departments for market oversight and management, are to lawfully handle the registration of foreign investment enterprises. The State Council departments for market oversight and management shall publish the list of departments it authorizes for market oversight and management.
The registered capital of foreign-invested enterprises may be expressed in Renminbi, and may also be expressed in freely-convertible currencies.
Article 38: Foreign investors or foreign-invested enterprises shall submit investment information to the competent departments for commerce through the enterprise registration system and the enterprise credit information disclosure system. The State Council departments for commerce and market oversight and management shall complete connections and work linkages between related business systems, and provide guidance to foreign investors and foreign-invested enterprises in sending investment information.
Article 39:The content, scope, and frequency of foreign investment information reports, and their specific processes, is to be determined and published by the State Council departments of commerce together with the State Council departments for market oversight and management, and other relevant departments, in accordance with the principles of actual need, high efficiency, and convenience. The competent departments for commerce and other relevant departments shall strengthen information sharing, and where investment information can be obtained through departmental information sharing, must not again request that the foreign investors or foreign-invested enterprises send it.
Investment information sent by foreign investors and foreign-invested enterprises shall be truthful, accurate, and complete.
Article 40: The State is to establish a security review system for foreign investment and conducts security review of foreign investment that affects or may affect national security.
Chapter V: Legal Responsibility
Article 41: Where governments and relevant departments or their staffs have any of the following circumstances, their responsibility is to be pursued in accordance with law:
(1) Not lawfully treating foreign and domestically invested enterprises equally in drafting or implement relevant policies;
(2) illegally restricting foreign-invested enterprises' equal participation in efforts on the drafting or revision of standards, or applying technical requirements higher than the mandatory standards especially aimed at foreign-invested enterprises;
(3) Illegally restricting the sending or receipt of capital by foreign investors'
(4) Not fulfilling the policy commitments made to foreign investors or foreign-invested enterprises and the various types of contracts concluded in accordance with law, or making policy commitments beyond the scope of authority or that have content which does not comply with the provisions of laws and regulations.
Article 42: Where government procurers or procurement agencies carry out differentiated or discriminatory treatment of foreign-invested enterprises through unreasonable requirements, pursue their legal responsibility in accordance with the Government Procurement Law and its implementing regulations; and where it impacts or might impact winning a bid or forming a deal, it is to be handled in accordance with the Government Procurement Law and its implementation regulations.
Where departments for the oversight and management of government procurement do not address foreign-invested enterprises' complaints in the time provided, the directly responsible managers and other directly responsible personnel are to be given sanctions in accordance with law.
Article 43: Where administrative organs and their staffs exploit administrative tactics to compel or indirectly compel foreign investors and foreign-invested enterprises to transfer technology, the directly responsible managers and other directly responsible personnel are to be given sanctions.
Chapter VI: Supplementary Provisions
Article 44:For 5 years after the Foreign Investment Law takes effect, foreign-invested enterprises that were established in accordance with the "P.R.C. Chinese-Foreign Equity Joint Ventures Law," the "P.R.C. Wholly Foreign-Owned Enterprises Law," or the "P.R.C. Chinese-Foreign Contractual Joint Ventures Law" before the Foreign Investment Law took effect (hereinafter simply 'pre-existing foreign-invested enterprises"), may modify their organizational form and organization bodies in accordance with laws such as the "P.R.C. Company Law" and the "P.R.C. Partnership Enterprise Law" and lawfully modify their registration, but may also continue to maintain their original organizational form and bodies, etc.
Beginning on January 1, 2025, the departments for market regulation will not handle other registration matters applied for by pre-existing foreign-invested enterprises that have not lawfully adjusted their organizational form and organization bodies or modified their registration and will announce the relevant circumstances.
Article 45:Specific measures for pre-existing foreign-invested enterprises handling formalities for modification of organizational form and organizational bodies and other such matters for modification of registration are to be provided and published by the State Council departments for market regulation. The State Council departments for market regulation shall strengthen guidance of work on modification of registrations, and market regulation departments responsible for handling registration modifications shall use multiple methods to optimize services and facilitate enterprises' modifications of their registrations.
Article 46:After the organizational forms and organizational bodies of pre-existing foreign-invested enterprises are adjusted in accordance with law, the stock rights, methods for transfer of benefits, methods for distribution of residual property, and so forth for each party to the former joint venture or cooperation may continue to be handled in according with their agreements.
Article 47:The relevant provisions of the Foreign Investment Law and these Regulations apply to investments in mainland China by foreign-invested enterprises.
Article 48:Refer to the Foreign Investment Law and these Regulations for investors from the Hong Kong and Macao Special Autonomous Region investing in the mainland, but where administrative regulations or the State Council have other provisions they are controlling.
For investors from the Taiwan region making investments in the mainland, apply the provisions of the "P.R.C. Law on the Protection of Investments by Taiwan Compatriots" (Hereinafter "Taiwan Compatriot Investment Protection Law"); and where the Taiwan Compatriot Investment Protection Law does not have provisions, implementation is to be with reference to the Foreign Investment Law and these Regulations.
Refer to the Foreign Investment Law and these Regulations for Chinese citizens who have taken up residence abroad who are investing in the mainland, but where administrative regulations, or the State Council have other provisions they are controlling.
Article 49: This Regulation takes effect on January 1, 2020. The "Implementation Regulations for the P.R.C. Chinese-Foreign Equity Joint Ventures Law," the "Temporary Provisions Periods for Wholly Foreign-Owned Enterprises", the "Implementation Regulations for the P.R.C. Chinese-Foreign Contractual Joint Ventures Law" are revoked at the same time.
Where provisions related to foreign investment that were drafted before January 1, 2020 are inconsistent with the Foreign Investment Law and these Regulations, the Foreign Investment Law and these Regulations are controlling.