China's rubber-stamp Parliament on Friday approved a landmark foreign investment law to ease global concerns about its business environment, as the world's second largest economy tries to end a bruising trade war with the US.
China's parliament, the National People's Congress (NPC), concluded its 10-day annual session on Friday by adopting the law. Chinese President Xi Jinping and other leaders attended the closing meeting of the annual session at the Great Hall of the People in Beijing.
Delegates at the NPC passed the foreign investment law with 2,929 in favour, eight against and eight abstentions.The law will come into effect on 1 January 2020.
The new law aims to create a more level playing field between domestic and foreign businesses.
But some argue it does not fully address the concerns foreign firms have about doing business in China.
The world's two largest economies are locked in a trade war since Trump imposed heavy tariffs on imported steel and aluminium items from China in March last year.
Trump imposed tariff hikes of up to 25 per cent on USD 250 billion of Chinese goods. In response, China, the world's second largest economy after the US, imposed tit-for-tat tariffs on USD 110 billion of American goods.
Top trade officials from America and China are holding talks to negotiate a comprehensive trade deal.
US President Donald Trump is demanding China to reduce the USD 375 billion trade deficit, provide legal protection for intellectual property rights (IPR), technology transfer and more access to American goods to Chinese markets.
"The adoption of the foreign investment law is an innovation in the legal system on foreign investment and is to replace the existing three laws and serve as the basic law on foreign investment as China continues to open up in the new era," Zhang Yesui, the spokesman of the NPC said ahead of the session.
The new law clearly stipulates that foreign investment in China will be subject to pre-established national treatment plus a negative list management system and the case-by-case approval management mode will be abolished, he said.
According to the law, industries where foreign investment is prohibited or restricted are specified in the negative list. Industries that are not on the list will be fully open, with domestic and foreign firms enjoying the same treatment.
"This is fundamental change in China's foreign investment management system, and help create a more open, transparent and predictable environment for investors and provide stronger legal guarantee on China's new opening-up," Zhang said.
The law also has clear positions on the protection of foreign investors' rights regarding issues such as intellectual property rights protection and technology transfer that are of common concern to foreign investors, Zhang said.
During the session, Chinese legislator also adopted Premier Li Keqiang's government work report. They also approved the work reports of the NPC Standing Committee, the Supreme People's Court and the Supreme People's Procuratorate.
In addition, the legislators passed resolutions on the reports of the national economic and social development plans as well as the central and local budgets.
This marks the end of this year's annual political season of China. Besides the NPC, the Chinese People's Political Consultative (CPPCC), a national advisory body, also concluded its session.