China to enact Foreign Investment Law

Li Kiqiang, Chinese Premier addressing the lawmakers on Tuesday at the Great Hall

By Morris Doggain Beijing

China’s Legislature-the National People’s Congress (NPC) is set to enact a new foreign investment law that would enable foreign investors and multinational companies to invest in China.

The second session of the 13th NPC started on Tuesday in Beijing. President Xi Jingping attended the session. Nearly 3,000 lawmakers are attending the session which is expected to last for ten days.

The lawmakers are expected to deliberate on issues of the country’s economy, unemployment, environmental pollution, poverty reduction, military advancement and intelligence.

While presenting the government work report on the implementation of the 2018 plan and the 2019 draft plan, Chinese Premier Li Keqiang said the law would open China for foreign investment.

“We will enact the foreign investment law, revise the negative list of foreign investments and thoroughly review and remove restriction on market access for foreign investment to sectors which are not on the list,” Li said.

Under the 2017 Catalogue, foreign investors are incentivized to invest in “Encourage” Sector and are banned from investing in “Prohibited” sector. The restrictive measures include shareholding limitation and requirement regarding the high ranking executives.

The premier promised that reform measures would be developed to support pilot free trade zone in opening wider and pursuing innovation driven development.

On the international trade rule, Li stated that China would use international platforms to enhance policy coordination and expand converging interests with other countries.

“We will actively take part in the reform of the World Trade Organization (WTO), firmly uphold the multilateral trading regime, play a positive role in the formulation of multilateral trade rules and promote the establishment of fair reasonable and transparent system of international trade rules,” he added.

“We will further reduce the custom clearance time and lower compliance cost for importation and exportation and strong steps to promote international mutual accreditation for authorized economic zones,” premier Li stated.

The 59 page work report delivered by Premier Li covers major achievements the government of China has so far made in the last year, the problems faced and the targets for the next year.

According to the work report,China Gross Domestic Product (GDP) recorded an increase of 6.6 percent in the past year and a total of 13.61 million urban jobs were Created.

Li said this year, the projectedtarget a (GDP) of 6-6.5 percent. The country aims to create about 11 million jobs across the country.

According to Li, the Value-Added Tax for Manufacturing and other industries would be reduced by 3 percent, from 16 percent to 13 percent.

What is NPC?

The NPC is the supreme organ of state power in China. It is composed of NPC deputies who are elected according to law from 35 electoral units from the people’s congresses of provinces, autonomous regions, municipalities directly under the Central Government, the People’s Liberation Army, the deputy election council of the Hong Kong Special Administrative Region and the Taiwan compatriots’ consultation election council.

Each congress is elected for a term of five years. A total of about 2,975 deputies were elected to the current NPC before the first session was convened.

The NPC meets in session once a year. An interim session of the NPC may be convened at any time if the Standing Committee of the NPC deems it necessary or if one-fifth or more of its deputies so propose.

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