Editor's note: The newly passed Foreign Investment Law indicates that China is stepping up its protection of intellectual property rights, said Yukon Huang, a senior fellow with the Asia Program at the Carnegie Endowment for International Peace, in an interview with Xinhua News Agency:
China's national legislature passed the Foreign Investment Law on Friday. The law, which will become effective on Jan 1, 2020, aims to improve the transparency of foreign investment policies and ensure domestic and foreign enterprises are subject to a unified set of rules and compete on a level playing field.
The law stipulates that the government shall protect the intellectual property rights of foreign investors and foreign-invested enterprises, and shall manage foreign investment according to the system of pre-establishment national treatment plus a negative list.
The objective of moving to a negative list is a very good idea as it gives greater clarity to foreign investors. China's negative list has been getting shorter over the past few years, and the inclusion of a negative list in the law means that the principle has been appropriately included in the Chinese administrative system.
By the end of 2018, about 960,000 foreign-invested enterprises had been set up in China, with the accumulated foreign direct investment exceeding $2.1 trillion, according to China's Ministry of Commerce. It is in line with China's interests to continue welcoming more foreign investment because it promotes competition.
The Foreign Investment Law is really about intentions and establishing principles. It is designed to better protect and attract foreign investment through legislative means. As some of the issues are very complicated, China will clarify more details for the law's effective implementation.
Premier Li Keqiang has said the government will introduce a series of supporting regulations and directives to protect the rights and interests of foreign investors.
In this respect, he has vowed revisions to the laws on IPR protection and the introduction of a mechanism of punitive compensation to ensure that all infringements of intellectual property will be seriously dealt with.