What Happened: China's National People's Congress has passed a foreign investment law that includes provisions to ban forced technology transfers and calls for the equal treatment of foreign and domestic investors, Caixin reported March 15.
Why It Matters: The Chinese government is attempting to showcase its commitment to addressing foreign business concerns and some key U.S. demands amid ongoing trade negotiations with Washington, including topics like contract provisions that require foreign firms to give their Chinese partners access to their proprietary technology and the need for greater protection for intellectual property rights. While the law shows some intent to level the playing field for foreign businesses, local enforcement remains a significant challenge as many of the provisions are ambiguous and provide loopholes for local governments to skirt a full implementation.
Background: Chinese lawmakers have expedited drafting and reviewing the foreign investment law as Beijing scrambles to offer concessions to Washington in their ongoing trade talks.
- China Opts for Tax Cuts to Jolt Its Economy Awake (March 13, 2019)
- China, U.S.: A Trade Agreement, Albeit Limited, Appears Near (March 4, 2019)
- The End of Strategic Luxury for China (Feb. 14, 2019)