The sixth session of the Standing Committee of the 16th Beijing Municipal People's Congress held its first deliberation for the Regulations of Beijing Municipality on Foreign Investment (Draft) on November 22. The significance of foreign investment in facilitating the growth of Beijing's open economy has been widely acknowledged in recent years. During the session, Beijing Municipal Bureau of Justice said that Beijing's foreign investment actually utilized during the 13th Five-Year Plan period reached USD 79.6 billion, accounting for more than 11.8 percent of the national total. In 2022, that figure reached USD 17.41 billion, up by 12.7 percent year-on-year comparably and 4.7 percentage points higher than the national growth rate.

Promoting investment

Encouraging foreign investment to prioritize strategic emerging industries

To create a fair and competitive market environment, it is essential to remove the hidden barriers impeding foreign investment. The Draft follows provisions of the superior law, calling for Beijing to adopt a pre-establishment national treatment and a negative list management system for foreign investment in accordance with the law. The negative list for market access, the catalog of prohibited and restricted new industries in Beijing, and administrative licensing specified by laws and regulations apply equally to foreign and domestic enterprises in sectors not included in the negative list. At the same time, the Integrated National Demonstration Zone for Opening up the Services Sector and the China (Beijing) Pilot Free Trade Zone will serve as testing grounds for experimental policies and measures designed to boost foreign investment and facilitate opening-up, with the ultimate goal of replicating and promoting the experience gained in the two zones on a larger scale.

Strategic emerging industries will continue to receive the lion's share of foreign-funded project support. The Draft proposes to encourage and guide foreign investors to invest in Beijing's major development sectors such as strategic emerging industries, high-end manufacturing, and the modern service industries. It also supports the establishment of regional headquarters and various functional organizations for multinational corporations in Beijing, promoting their business development and functional expansion and facilitating their transformation into Asia-Pacific or global headquarters. Finally, qualified foreign investors are encouraged to establish investment companies in Beijing, and enterprises established with their investment are eligible for the same treatment as foreign-funded enterprises under the relevant state regulations.

Protecting investment

Formulating policies and regulations on foreign investment based on a fair competition review

The Draft emphasizes the principle of "equality" by stating that foreign-funded enterprises are subject to the same national and municipal policies supporting enterprise development. It also outlines the need to formulate local laws, regulations, and normative documents applying to foreign investment on the basis of a fair competition review and legality check by taking into account the opinions of foreign-funded enterprises, chambers of commerce, and associations. To ensure a smooth implementation, it is essential to incorporate necessary adjustment periods.

In order to improve the protection of intellectual property rights (IPR) for foreign-funded enterprises, the Draft proposes to incorporate the intellectual property rights protection for foreign investors and foreign-funded enterprises in a mechanism for quick coordination on IPR protection, and a multi-channel IPR disputes settlement mechanism while suggesting the same standards of protection as those provided for enterprises funded domestically.

Foreign-funded enterprises will be granted equal opportunities to engage in government procurement activities through fair competition in accordance with the law, and will receive support in their involvement in the development of standards, so as to promote the full process information disclosure of local standards formulation and revision. The relevant authorities will be responsible for investigating and rectifying illegal activities, such as the discriminatory treatment of foreign-funded enterprises. Finally, foreign-funded enterprises will have the right to question and complain if they believe that their rights and interests have been disregarded during government procurement activities.

Managing investment

Realizing full online registration of foreign-funded enterprises

Registration processes will be further optimized for foreign-funded enterprises. The Draft calls for the authorities of Beijing Municipal Administration for Market Regulation to optimize the registration process of foreign-funded enterprises, with a focus on improving efficiency, and establish an alignment and verification mechanism for identity authentication in conjunction with relevant authorities, so as to make sure that the entire registration process can be completed online. The authorities of Beijing Municipal Administration for Market Regulation should support limited liability companies looking to changes between domestic and foreign enterprise types as a result of changes in shareholders.

The Draft also aims to further lighten the burden on enterprises by calling upon the relevant authorities to enhance coordination in supervising and inspecting foreign-funded enterprises through credit risk classification management and random selection of both inspectors and inspection targets and prompt release of results. Moreover, it advocates for better coordination of enterprise-related law enforcement and inspection in work safety, environmental protection, and product quality to streamline the inspection process and avoid unnecessary repetition.

Facilitating investment

Guaranteeing the free and legal transfer of foreign investment funds

Measures to facilitate the cross-border flow of data and funds have also been further clarified. As outlined in the Draft, Beijing will establish systems for the security assessment of cross-border data transfer for foreign-funded enterprises, the verification and protection of personal information, and the filing of standard contracts for cross-border personal information transfer. The authorities of the Cyberspace Administration of Beijing shall, in conjunction with relevant authorities, take measures to open up green channels, carry out cross-border security assessments of important data and personal information for eligible foreign-funded enterprises, and promote the secure, orderly, and free flow of data.

The policy for free cross-border capital flows has expanded its scope, transitioning from a pilot program within a free trade zone to encompass the entire city. The Draft calls for the city to follow national regulations to facilitate prompt inward and outward remittances of all transfers related to verified and compliant foreign investments. The income and other legal earnings of foreign employees and employees from Hong Kong SAR, Macao SAR, and Taiwan of China in foreign-funded enterprises can be remitted overseas in accordance with the law.

Investment services

Providing whole-process services for key foreign-funded projects

The word "service" is prominently featured in the Draft, particularly with regard to the implementation of the integrated "single-window" processing for government services, providing market entities with standardized, convenient, and efficient government services. Moreover, the relevant authorities are called upon to establish acceptance criteria, procedures, materials, and other aspects concerning foreign-related government services and are responsible for keeping the public informed. In terms of the communication between the government and enterprises, the People's Government of Beijing Municipality regularly holds high-level dialogues with foreign-funded enterprises to coordinate and solve their major and difficult problems. Finally, the relevant authorities and district-level people's governments regularly organize exchanges with foreign-funded enterprises to seek their opinions and suggestions in person.

To enhance the protection and assistance provided to key projects, the Draft specifically calls for the establishment of a comprehensive service mechanism for important foreign-funded projects, providing extensive support throughout the entire project lifecycle, encompassing activities such as negotiating, contract signing, registration, and project operations. "Service packages" and "butler services" will be adopted to coordinate and implement service items comprehensively so as to ensure foreign-funded enterprises receive personalized, targeted, and regular services they need.

(Source: Beijing Daily)