What is it now in Beijing adopted the law on the protection of foreign investment in value? The reactions of Western corporate and business associations fall out pretty clearly.
If you Believe in the words of the Chinese Prime Minister, Li Kequiang, then a completely new era for foreign companies in China. In the future, China, Li will protect “the rights and interests of foreign investors”. To this end, the new investment law has been adopted at all by the National people’s Congress, said Li at a press conference on Friday in Beijing.
What is in the future to ensure the “Foreign Investment Law”, calling for Western companies for decades: The protection against unfair trade practices, forced technology transfer, or the theft of intellectual property. However, the new law is actually a Golden era for Western companies in China to come in – so that no one expects.
Prime Minister Li Keqiang promises to be a further Opening of the Chinese market
The European chamber of Commerce in Beijing, is skeptical. There are too many to be just behind the doors to the disadvantage of European companies. The Chinese side reserves, unilaterally against foreign trade and investment partner to proceed if they failed, according to Chinese perception, against the principle of a fair give-and-take: “Its vague wording also contributes to the legal uncertainty that the law creates for foreign companies,” criticized the European chamber of Commerce.
Polite praise from the U.S. business lobby
Jacob Parker from the US-China Business Council in Beijing, which represents the interests of more than 200 American companies in China, welcomed the fact that the law foresees, as the US demanded a better protection of intellectual property: “The law established criminal sanctions for the disclosure of sensitive foreign information on the company can limit counterfeiting and the theft of intellectual property is much harder. This will open up new avenues for the enforcement of the protection of intellectual property,” he said. Nevertheless, it is still difficult for affected Western companies, their interests in front of Chinese courts to enforce, admitted Parker.
“Which is the Chinese law enforcers will take action against a functionary of the party”, – quotes the German press Agency, the rhetorical question of a U.S. company representative.
Law as a peace gesture to the United States
US President, Donald Trump has accused the Chinese always unfair trade practices. These include massive subsidies for China’s more than 100 large state-owned companies, the preference of Chinese companies in tenders and the theft of intellectual property, especially that of U.S. high-technology.
These unfair practices are criticised for many years by European companies, says Andreas Langos, the results in Shanghai a packaging company. “Moreover, European companies have repeatedly complained in the past few years,” he says in an Interview with the ARD radio broadcasting Studio in Shanghai. “It was moaning a lot. But not all of the calls, with vehemence, were changes. Donald Trump, however, has a completely different vehemence, with his Tweets and other actions. In the end, we will benefit as a European and as a German, too.”
The new law should not, in the future, advancing only the forced transfer of technology in a tie – it should allow foreign companies in the future to participate in government tenders, announced the Vice Minister of Commerce Wang Shouwen.
Nevertheless, foreigners still remain in the 48 sectors of the economy outside. In these key sectors on a Negative list, foreign investment is either totally prohibited or require special approval, announced Wang on the edge of the people’s Congress at a press conference.
Many Chinese state-owned enterprises, particularly in heavy industry – are considered to be non-competitive
The balance between market opening and protection of ailing state companies
The government in Beijing is in a Dilemma: In a trade dispute you need to come to the USA visible, but at the same time you can’t suspend your company from one day to the other the forces of free competition. The would not survive, as the experts in China and in the West agree, especially the Chinese state-owned enterprises. The consequences would be a massive increase in unemployment, which could trigger social unrest and the omnipotence of the Communist party would threaten.
Therefore, the party leaders have ensured that it retains the threads in the Hand, writes Katja in Hausen from Berlin’s China Think Tank Merics: “In all the laws, rules and regulations, a great inspection is also planned for the future and room for Adjustment for the Communist party of China (CPC), albeit not explicitly. The party uses the legal formulation of the criteria for Intervention by the state in order to protect themselves against accusations from abroad, you are acting arbitrarily. In an article In the party magazine Qiushi to political theory, Xi called recently, the “law as a weapon in the confrontation with foreign countries”. As the security test for foreign investment will look like and what this means for foreign companies, in practice, is still not in sight, so in Hausen.
Victor Shih: “In reality, they make it for foreign companies unbearable”
Expert: preference for Chinese companies goes on
The foreign investment law, however, at least in the right direction, in order to create equal conditions for foreign and Chinese investors in China? Victor Shih from the 21st Century China Center at the University of California in San Diego is more than skeptical: “The answer is no. It doesn’t matter what has brought the Chinese government to paper. China has always changed a very successful provisions on the lower level, in order to protect the domestic industry.”
Many of the requirements are not even legally, but still part of the rules. And sometimes they are not fixed in the rules in writing, explains Shih in an Interview with DW. “Sometimes a Chinese company will have to wait a month on a government approval, production started, while a foreign company has to wait six months. So you keep strictly to all laws and regulations, but in reality, they make it for foreign companies unbearable.”