Comments to the SH PC on the Shanghai Foreign Investment Regulations (Draft)

2020-09-10 | Beijing, Shanghai

EU companies in China have placed high expectations on the continuous reform of the foreign investment legal system, and sincerely hope that it can create a fair, open and transparent competitive environment and market access conditions for all market players. We retain the previous position that the Foreign Investment Law shall not distinguishes foreign and local companies from a legal level which causes foreign enterprises to worry about whether they can truly achieve national treatment and a level playing field. We hope instead to see that relevant laws and regulations concerning foreign investment can be merged with the Company Law to achieve a unified management of foreign enterprises and domestic enterprises. Meanwhile, the European Chamber appreciates the Chinese government’s willingness to strengthen the promotion, protection and management of foreign investment. It is hoped that the supporting regulations can be issued as soon as possible, and it is recommended that the current laws and regulations related to foreign investment supervision be sorted out in a timely manner. We also hope that the timetable of implementation and the lead government unit can be announced to ensure the smooth implementation of the Foreign Investment Law and its implementation regulations.

The Draft for Comments is not only in strict accordance with the Foreign Investment Law and its implementation regulations and other laws and administrative regulations by unifying with its relevant spirit, but also it aims to serve foreign enterprises and promote foreign investment with regional policies in line with local conditions. However, as an important destination for foreign investment in China, Shanghai can play a vanguard and exemplary role and encourage the implementation of the policy of opening up to foreign investment. The European Chamber have noticed that the Draft has listed out many general principles, but lacks operational details, which may lead to deviations in the understanding and implementation by relevant departments.

The government agencies mentioned in the Draft are mainly municipal/district governments, commerce departments, and development and reform commissions, but there are many government agencies involved in foreign investment that are given policy facilities to business operations. The European Chamber suggest to establish a clearer overall coordination mechanism that can provide guidance and inter-department coordination to various problems and needs encountered in the operation of foreign companies.

In addition, since the Shanghai Municipal Foreign Investment Regulations are the local implementation rules of the Foreign Investment Law and its Implementation Regulations, it is particularly important for foreign investors to participate in the formulation of the regulations. The Chamber suggests that in the next draft for comments relevant government authorities can provide an official bilingual version in both Chinese and English for foreign investors and foreign employees to provide comments and suggestions. This is also the best proof of the implementation of Article 18 of the Draft: "The municipal department of commerce shall, in conjunction with relevant departments, regularly compile various guidelines for foreign investment, white papers on the foreign investment environment, and publish them in Chinese and English, and update them in time".

The Draft for Comments has established a relatively complete government service system. However, as a unified service platform for foreign investment promotion in the whole city, the "all in one network office" still is suggested to integrate general affairs to reduce unnecessary duplication of information input or cross-management; meanwhile, although there is an independent foreign service interface, there is a lack of some matters that are still managed by merged with domestic companies, for which, however, the elements or materials of these matters may be different, causing inconvenience to the clerks, and thus it is unable to reflect the concept of promoting foreign investment and serving for foreign investment.