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China's parliament approves new foreign investment law

China's parliament approves new foreign investment law

The new law will take effect on 1 January 2020.

Chinese Premier Li Keqiang attends a news conference following the closing session of the National People's Congress (NPC) at the Great Hall of the People in Beijing, China March 15, 2019.

China's number two leader yesterday denied Beijing tells its companies to spy overseas, refuting United States warnings that Chinese technology suppliers might be a security risk.

Chinese legislators on Friday endorsed a law meant to help end a costly tariff war with Washington by discouraging officials from pressuring foreign companies to hand over technology.

At a time when protectionist sentiments are increasing, China's new law will reassure foreign investors, foster fair competition and create a transparent business environment for foreign firms, said Kulkarni, former chairman of Observer Research Foundation Mumbai, an Indian think tank. Moreover, Donald Trump has said that he's in "no rush" to do a trade deal but that "it's got to be a good deal for us and if it's not, we're not going to make that deal".

China has passed a new foreign investment law in a move widely seen as an effort to facilitate U.S. trade talks.

The bill will eliminate the requirement for foreign enterprises to transfer proprietary technology to Chinese joint-venture partners and protect against "illegal government interference" - major sticking points in the trade negotiations.

China will also amend its intellectual property law and "introduce a punitive damages mechanism to ensure that all infringements will be seriously dealt with", Chinese Premier Li Keqiang told reporters at the end of the parliament's two-week session.

But some argue it does not fully address the concerns foreign firms have about doing business in China. Foreign investors and companies may establish and voluntarily join chambers of commerce and trade associations in accordance with the law in order to safeguard their legitimate rights and interests. "More than anything else, foreign companies want equal treatment and opportunities", said the group's president, Mats Harborn.

Data on Thursday showed that China's survey-based jobless rate rose to 5.3 per cent in February, from 4.9 per cent in December, partly due to job shedding by export-oriented companies. It expressed concern about the broad scope of "national security reviews" allowed by the law and the impact of regulations on individual industries. He added that the Beijing government acted very responsibly and reasonably.

China is still negotiating with the United States to resolve their trade frictions, Li said, adding both sides have far more shared interests than conflicts, and it would be "unrealistic" to decouple the world's two largest economies. It says the law, which was passed Friday, includes better safeguards for intellectual property and an end to the practice of forcing global firms to hand over critical technology to their Chinese partners.

China is targeting a GDP growth range of 6 to 6.5 per cent this year, down from 6.6 per cent in 2018 - the slowest pace in 28 years.