Foreign Investment Law of the PRC — Full English Translation (2019)

Adopted at the Second Session of the 13th National People’s Congress on March 15, 2019

Effective: January 1, 2020

Table of Contents

Chapter I — General Provisions

Article 1 — This Law is enacted for the purposes of further expanding opening-up, vigorously promoting foreign investment, protecting the lawful rights and interests of foreign investors, regulating the administration of foreign investment, promoting the formation of a new pattern of comprehensive opening-up, and facilitating the sound development of the socialist market economy.

Article 2 — This Law applies to foreign investment within the territory of the People’s Republic of China. For the purposes of this Law, “foreign investment” means investment activities carried out directly or indirectly within the territory of China by foreign natural persons, enterprises or other organizations (hereinafter referred to as “foreign investors”), including the following circumstances: (1) a foreign investor establishes a foreign-invested enterprise within the territory of China, either independently or jointly with any other investor; (2) a foreign investor acquires shares, equity interests, property shares or other similar rights and interests of an enterprise within the territory of China; (3) a foreign investor makes investment in a new project within the territory of China, either independently or jointly with any other investor; and (4) investment through other means as provided by laws, administrative regulations or the State Council. For the purposes of this Law, “foreign-invested enterprise” means an enterprise established within the territory of China and registered in accordance with the laws of China in which all or part of the investment is made by a foreign investor.

Article 3 — The State shall adhere to the basic state policy of opening-up and shall encourage foreign investors to make investments within the territory of China. The State shall implement the policies of high-level investment liberalization and facilitation, establish and improve mechanisms for the promotion and protection of foreign investment, and foster a stable, transparent, predictable and fair market environment. Foreign investors may, in accordance with laws, administrative regulations or the provisions of the State Council, enjoy the treatment of national treatment plus a negative list for foreign investment access in specified fields for which special administrative measures for access of foreign investment apply. The State shall grant national treatment to foreign investment beyond the negative list for foreign investment access. The negative list for foreign investment access shall be formulated, issued and approved by the State Council.

Article 4 — The State shall protect the investment, earnings and other lawful rights and interests of foreign investors and foreign-invested enterprises within the territory of China in accordance with the law, and shall ensure that foreign-invested enterprises enjoy the rights and shall fulfill the obligations on an equal basis in accordance with the law. The State shall not expropriate or requisition the investment of foreign investors under any circumstances; where expropriation or requisition is necessary for special public interests, it shall be conducted in accordance with statutory procedures and fair and reasonable compensation shall be provided in a timely manner.

Article 5 — The State shall protect the intellectual property rights of foreign investors and foreign-invested enterprises in accordance with the law, protect the lawful rights and interests of holders of intellectual property rights and their relevant rights holders, and shall encourage technology cooperation on the basis of voluntary principles and commercial rules in the process of foreign investment. The conditions for technology cooperation shall be determined by all investment parties on an equal basis through consultation. No administrative department or its staff shall force or force in a disguised form any foreign investor or foreign-invested enterprise to transfer technology by administrative means.

Article 6 — Foreign investors and foreign-invested enterprises conducting investment activities within the territory of China shall comply with the laws and administrative regulations of China and shall not compromise the national security of China or harm the public interest.

Article 7 — The competent department for commerce and the competent department for investment under the State Council shall, in accordance with their respective division of duties, carry out the work of promoting, protecting and administering foreign investment. Other relevant departments of the State Council shall be responsible for the work relating to the promotion, protection and administration of foreign investment within their respective scope of duties. The relevant departments of the local people’s governments at or above the county level shall carry out the work relating to the promotion, protection and administration of foreign investment in accordance with laws and regulations and the division of duties as determined by the people’s governments at the same level.

Article 8 — Employees of foreign-invested enterprises may establish trade union organizations in accordance with the law, carry out trade union activities, and safeguard the lawful rights and interests of employees. Foreign-invested enterprises shall provide the necessary conditions for the activities of their trade unions.

Chapter II — Investment Promotion

Article 9 — Foreign-invested enterprises shall equally apply the State’s policies on supporting the development of enterprises in accordance with the law. Where the laws, administrative regulations or policies of the State provide otherwise, such provisions shall prevail.

Article 10 — Before drafting normative documents concerning foreign investment, the opinions and suggestions of foreign-invested enterprises shall be heard as appropriate. Timely publication of regulatory documents and arbitration awards and judgments concerning foreign investment shall be made.

Article 11 — The State shall establish a sound system for serving foreign investment, and provide foreign investors and foreign-invested enterprises with consultation and services on laws and regulations, policies and measures, investment project information and other aspects.

Article 12 — The State shall strengthen economic and trade exchanges and cooperation with other countries, regions and international organizations, establish and improve mechanisms for investment promotion, and improve the level of internationalization of foreign investment services.

Article 13 — The State may, as needed, establish special economic zones or adopt pilot policies and measures for foreign investment in specific regions to further expand opening-up and promote foreign investment. The State may, as needed, introduce market-oriented measures to encourage and guide foreign investment.

Article 14 — The State shall, in accordance with the needs of national economic and social development, encourage and guide foreign investors to invest in specific industries, fields and regions. Foreign investors and foreign-invested enterprises may enjoy preferential treatment in accordance with the provisions of laws, administrative regulations or the State Council.

Article 15 — The State shall guarantee that foreign-invested enterprises may equally participate in standardization work in accordance with the law, and that the formulation of national standards shall treat foreign-invested enterprises equally and fairly. Mandatory national standards formulated by the State shall equally apply to foreign-invested enterprises.

Article 16 — The State shall guarantee that foreign-invested enterprises shall participate in government procurement activities on a fair and equal basis through fair competition. Products produced and services provided by foreign-invested enterprises within the territory of China shall be treated equally in government procurement in accordance with the law.

Article 17 — Foreign-invested enterprises may conduct financing through public issuance of stocks, corporate bonds and other securities or other means in accordance with the law.

Article 18 — Local people’s governments at or above the county level may, in accordance with laws, administrative regulations and the provisions of their respective local regulations, formulate policies on promoting and facilitating foreign investment within their respective statutory competence.

Article 19 — People’s governments at all levels and their relevant departments shall, in accordance with the principles of facilitation, efficiency and transparency, simplify the procedures for foreign investment matters, raise the level of services and efficiency, and further improve government services in the area of foreign investment. The relevant competent departments shall prepare and publish guidelines for foreign investment, providing foreign investors and foreign-invested enterprises with guidance on services and facilitation.

Chapter III — Investment Protection

Article 20 — The State shall not expropriate or requisition the investment of foreign investors. Under special circumstances, where the State needs to expropriate or requisition the investment of foreign investors for the public interest, such expropriation or requisition shall be conducted in accordance with statutory procedures and fair and reasonable compensation shall be provided in a timely manner.

Article 21 — A foreign investor may, in accordance with the law, freely remit into or out of the territory of China its capital contributions, profits, capital gains, income from asset disposal, royalties derived from intellectual property rights, lawfully obtained damages or compensation, proceeds from liquidation, and other amounts in RMB or any foreign currency. No entity or individual may unlawfully restrict the currency, amount or frequency of such remittances.

Article 22 — The State shall protect the intellectual property rights of foreign investors and foreign-invested enterprises in accordance with the law, and shall encourage technology cooperation on the basis of voluntary principles and commercial rules. In the process of foreign investment, the conditions for technology cooperation shall be determined by all investment parties on an equal basis through consultation. No administrative department or its staff shall force or force in a disguised form any foreign investor or foreign-invested enterprise to transfer technology by administrative means. The State shall establish a comprehensive system for the protection of intellectual property rights, impose legal liability for infringements of intellectual property rights in accordance with the law, and promote the creation, application and protection of intellectual property rights.

Article 23 — Where an administrative department and its staff are required by law to keep confidential the trade secrets of foreign investors or foreign-invested enterprises which they come to know in the course of performing their duties, such confidentiality shall be maintained in accordance with the law and shall not be divulged or illegally provided to others.

Article 24 — When formulating normative documents concerning foreign investment, people’s governments at all levels and their relevant departments shall comply with the provisions of laws and regulations; without any basis in laws or administrative regulations, such documents shall not derogate from the lawful rights and interests of foreign-invested enterprises or impose additional obligations on them, shall not set conditions for market access and exit, and shall not interfere with the normal production and business activities of foreign-invested enterprises.

Article 25 — Local people’s governments at all levels and their relevant departments shall fulfill their policy commitments made to foreign investors and foreign-invested enterprises in accordance with the law and the provisions of all types of contracts concluded in accordance with the law. Where the policy commitments or contractual provisions need to be altered for the national interest or public interest, such alteration shall be carried out in accordance with statutory competence and procedures, and foreign investors and foreign-invested enterprises shall be compensated in accordance with the law for the losses incurred as a result of such alteration.

Article 26 — The State shall establish a working mechanism for complaints concerning foreign-invested enterprises, to resolve problems raised by foreign-invested enterprises or their investors in a timely manner, and to coordinate and improve relevant policies and measures. Where a foreign-invested enterprise or its investor considers that an administrative action taken by an administrative organ or its staff has infringed upon its lawful rights and interests, it may apply for administrative reconsideration or bring an administrative lawsuit in accordance with the law. In addition to the provisions of the preceding paragraph, a foreign-invested enterprise or its investor may, through the working mechanism for complaints concerning foreign-invested enterprises, apply for coordination and resolution of problems encountered in the course of investment and business operations in accordance with the law. The working mechanism for complaints concerning foreign-invested enterprises shall be established and operated by the competent department for commerce under the State Council in conjunction with the relevant departments.

Article 27 — Foreign-invested enterprises may establish and voluntarily participate in chambers of commerce or associations in accordance with the law. Chambers of commerce and associations shall carry out relevant activities in accordance with laws, regulations and their articles of association, and shall safeguard the lawful rights and interests of their members.

Chapter IV — Investment Management

Article 28 — Where foreign investment requires the satisfaction of special administrative measures for foreign investment access (the negative list), the foreign investor shall satisfy the conditions specified in the negative list. The negative list for foreign investment access shall be formulated, issued and approved by the State Council. Where an international treaty or agreement concluded or acceded to by the People’s Republic of China provides for more favorable treatment for foreign investors in respect of foreign investment access, the relevant provisions of such treaty or agreement may govern.

Article 29 — Where foreign investment requires project approval or filing, such approval or filing shall be handled in accordance with the relevant provisions of the State. Where foreign investment involves the establishment of a foreign-invested enterprise, the relevant procedures for enterprise registration and tax registration shall be completed in accordance with laws and administrative regulations.

Article 30 — Where foreign investors invest in industries and fields within the negative list for foreign investment access, the foreign investor shall be subject to information reporting obligations in accordance with laws and regulations. In addition to the provisions of the preceding paragraph, the registration, capital contribution verification, tax administration, foreign exchange administration, customs administration and other matters of foreign-invested enterprises shall be governed by the relevant laws and administrative regulations.

Article 31 — Where foreign investors invest in industries and fields for which the State has implemented licensing administration, the relevant administrative license shall be obtained in accordance with the law. Except as otherwise provided by law or administrative regulations, the relevant administrative department shall handle the relevant licensing matter within the prescribed time limit in accordance with the licensing conditions and procedures.

Article 32 — Foreign-invested enterprises conducting production and business operations shall comply with the relevant provisions of laws and administrative regulations on labor protection and social insurance, and shall handle matters relating to taxation, accounting and foreign exchange in accordance with laws, administrative regulations and the relevant provisions of the State, subject to the supervision and inspection of the relevant competent departments in accordance with the law.

Article 33 — Where foreign investors merge with or acquire enterprises within the territory of China or participate in concentration of undertakings through other means, they shall be subject to the national security review in accordance with the law. The decision on the national security review made in accordance with the law shall be final.

Article 34 — The State shall establish a foreign investment information reporting system. Foreign investors or foreign-invested enterprises shall submit investment information to the competent department for commerce through the enterprise registration system and the enterprise credit information publication system. The content and scope of the foreign investment information report shall be in accordance with the principle of necessity and shall be limited to what is actually necessary; where the investment information available through inter-departmental information sharing can be obtained, the investment information shall not be required to be submitted again.

Article 35 — Where a foreign investor invests in a specific industry or field and the laws or administrative regulations provide that approval shall be obtained from the relevant competent department, such approval shall be obtained in accordance with the law. The relevant competent department shall handle the matter in accordance with the statutory conditions and procedures within the prescribed time limit for decision. Administrative departments and their staff shall not restrict foreign investors from applying for administrative licenses in accordance with the law or subject them to differential treatment based on the type of ownership, region, scale of investment or other factors.

Chapter V — Legal Liability

Article 36 — Where a foreign investor invests in an industry or field specified in the negative list for foreign investment access without satisfying the conditions or requirements set out in the negative list, the relevant competent department shall order it to take corrective action and adopt necessary measures to meet the required conditions or requirements; where it fails to take corrective action, or where the consequences are serious, it shall be subject to penalties in accordance with laws and regulations.

Article 37 — Where a foreign investor or foreign-invested enterprise fails to submit investment information as required by law, the competent department for commerce shall order it to take corrective action within a prescribed time limit; where it fails to take corrective action within the time limit, a fine of not less than RMB 100,000 and not more than RMB 500,000 shall be imposed.

Article 38 — Where a foreign investor or foreign-invested enterprise carries out investment activities in violation of laws or regulations, the relevant department shall investigate and deal with the matter in accordance with the law, and shall record such violation in the credit information system. Where foreign investors or foreign-invested enterprises commit illegal acts, they shall bear corresponding legal liability in accordance with the law.

Article 39 — Where a staff member of an administrative department abuses his or her powers, neglects his or her duties, or engages in malpractices for personal gain in the course of promoting, protecting or administering foreign investment, or divulges or illegally provides to others any trade secrets of foreign investors or foreign-invested enterprises which come to his or her knowledge in the course of performing his or her duties, the matter shall be dealt with in accordance with the law; where a crime is constituted, criminal liability shall be pursued in accordance with the law.

Chapter VI — Supplementary Provisions

Article 40 — Where any state or region adopts any discriminatory prohibitions, restrictions or other similar measures against the People’s Republic of China in respect of investment, the People’s Republic of China may, in light of the actual circumstances, adopt corresponding measures against such state or region.

Article 41 — Where foreign investors invest in the banking, securities, insurance or other financial industries within the territory of China, or invest in the securities market, foreign exchange market or other financial markets within the territory of China, the relevant laws and administrative regulations of the State shall govern; where the relevant laws and administrative regulations do not provide, this Law shall apply.

Article 42 — This Law shall come into force on January 1, 2020. The Law of the People’s Republic of China on Foreign-Capital Enterprises, the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures and the Law of the People’s Republic of China on Chinese-Foreign Cooperative Joint Ventures shall be repealed simultaneously. Foreign-invested enterprises established in accordance with the Law of the People’s Republic of China on Foreign-Capital Enterprises, the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures and the Law of the People’s Republic of China on Chinese-Foreign Cooperative Joint Ventures prior to the implementation of this Law may, within five years from the implementation of this Law, continue to retain the original form of enterprise organization. The specific implementation measures shall be formulated by the State Council.