|
(2) Amendment of local content requirement. For example, the Article 9.2 of the former Chinese-Foreign Equity Joint Ventures Law stipulated that an equity joint venture shall give priority to Chinese sources during its purchase of raw materials, fuels, auxiliary equipment, etc., but may acquire them directly from the international market with its own foreign exchange funds. The amendment was that an equity joint venture may, according to the principle of fairness and rationality, acquire them in the domestic market or directly in the international market during its purchase of raw materials, fuels, auxiliary equipment, etc., within its approved business scope. These changes make an equal competition platform for domestic and oversea products, and offer foreign investment enterprise more flexibility in global purchase.
(3) Elimination of export performance requirement. For instance, in the former Wholly Foreign-owned Enterprises Law, Article 3.1 stipulated that the establishment of a wholly foreign-owned enterprises must be beneficial to the development of the national economy of China, and such enterprise shall adopt advanced technology and equipment or export all or most of their products. While the amended provision provides that the establishment of a wholly foreign-owned enterprises shall be beneficial to the development of the national economy of China, and the State encourages the establishment of export-oriented or technically advanced wholly foreign-owned enterprises.
Article 2 of TRIMS and TRIMS Annex (Illustrative List) clearly stipulate that trade-related investment measures such as local content requirements, export performance requirement and foreign exchange balance requirements are in violation with national treatment principle and the obligation of general elimination of quantitative restrictions, therefore shall be forbidden. China promised to comply with TRIMS upon its WTO accession and thus eliminated all the aforesaid requirements. China’s competent departments will not implement contract articles containing such requirements.
Besides the abovementioned amendments to the establishment and management of foreign investment enterprises, the Chinese government is considering how to reinforce its introduction of foreign investments and how to introduce foreign investments into the reform of state-owned enterprises . Among various issues, the merger and acquisition (M&A) of domestic enterprise by foreign investorsand the listing of foreign investment enterprises in domestic securities markets are discussed mostly. It is reported that some rules are in process of drafting, but due to its complexity and too many ceilings and bottoms to touch or break through, the drafts may be difficult to come up in short times.
2. Legal Changes Concerning Market Accession
One may argue that the amendments of foreign investment enterprises laws, which were briefed above, were just some extrinsic changes to the forms that foreign capitals can take in order to enter China’s market. If so, then the extension of sectors or industries available to foreign capitals is more attractive and of material value to overseas investors, because such extension directly concerns the business scopes of foreign investments.
It is undoubted that the economic reform in China is becoming deeper, and business sectors in need of state control are getting less than before. Pursuant to China’s commitments and its domestic reform demands, the State Council and its competent departments of various industries took great effort to enact and amend administrative regulations and rules on the use of foreign capitals in corresponding industries. Especially, on 11 February 2002, the State Council published the new Foreign Investment Guidance Regulations, which detail the governing principles of the introduction of foreign capitals into China after WTO entry. Consequently, on 11 March 2002, SDPC, SETC and MOFTEC jointly promulgated the Foreign Investment Guidelines. The guidelines are the basic references of market accession because detailed sectors available to foreign investments are listed clearly.
Although more sectors are open to outside, detailed rules governing some sectors are absent or out-of-date, especially those rules concerning newly-opened sectors of trade in services. For that reason, the central government, in line with China’s commitments of market accession, revised and enacted extensive administrative regulations and rules concerning the market accession to various industries. Although many rules have been completed, this work is still under way. According to the statistic of the State Administration on Industry and Commerce (SAIC) made in May 2002 , there were 45 pieces of administrative regulations and rules stipulating the market accession of foreign capitals. Certainly the up-to-date number is more than that because of the promulgation of new rules after May 2002.
|
