Decree of the State Council of the People's Republic of China

No. 723

The Regulations for the Implementation of the Foreign Investment Law of the People's Republic of China have been adopted by the 74th Executive Meeting of the State Council on 12 December 2019 and are now promulgated, effective as of 1 January 2020.

Primer: Li Keqiang

26 December 2019

Regulations for the Implementation of the Foreign Investment Law of the People's Republic of China

Chapter I General Principles

Article 1 These regulations are formulated in accordance with the Foreign Investment Law of the People's Republic of China (hereinafter referred to as the Foreign Investment Law).

Article 2 The state encourages and promotes foreign investment, protects the legitimate rights and interests of foreign investment, regulates foreign investment management, continuously optimizes the foreign investment environment, and promotes higher levels of opening up.

Article 3 Other investors referred to in (1) and (3) of paragraph 2 of Article 2 of the Foreign Investment Law include natural persons in China.

Article 4 The negative list of foreign investment access (hereinafter referred to as the negative list) shall be proposed by the investment authority of the State Council in conjunction with the competent department of commerce of the State Council and other relevant departments. It shall be published by the State Council or by the State Council's investment authority and commerce department after approval.

In accordance with the needs of further opening up and economic and social development, the state will adjust the negative list in a timely manner. The procedures for adjusting the negative list shall apply the provisions of the preceding paragraph.

Article 5 The competent commerce department, investment authority and other relevant departments of the State Council shall, in accordance with the division of responsibilities, cooperate closely and cooperate with each other to jointly improve foreign investment promotion, protection and management.

Local people's governments at or above the county level shall strengthen the organizational leadership of foreign investment promotion, protection and management, support and urge relevant departments to carry out foreign investment promotion, protection and management in accordance with laws, regulations and responsibilities, and coordinate and resolve major issues in foreign investment's promotion, protection and management.

Chapter II Investment Promotion

Article 6 The government and its related departments shall treat foreign-invested enterprises and domestic-funded enterprises equally in accordance with the law in terms of government funding arrangements, land supply, tax and fee reductions, qualification permits, standard formulation, project declaration, and human resources policies.

The policies formulated by the government and relevant departments to support the development of enterprises should be made public according to law; For matters that need to be applied by the enterprise during the implementation of the policy, the government and its related departments should make public the requirements, procedures, deadline etc. of the application, and shall treat foreign-invested enterprises and domestic-invested enterprises equally during the review in accordance with the law.

Article 7 The formulation of administrative regulations, rules, and regulatory documents related to foreign investment, or draft laws and local regulations related to foreign investment by the government and its relevant departments, in accordance with the actual situation, it shall take various forms such as soliciting written opinions, holding seminars, demonstrative meetings, and hearings, and soliciting opinions and suggestions from foreign-invested enterprises and related chambers of commerce and associations. Opinions and suggestions on issues that widely reflected or involved significant rights and obligations of foreign-invested enterprises shall feedback the adoption of the opinions through appropriate manners.

Article 8 The people's governments at all levels shall establish and improve a foreign investment service system and continuously improve the level of foreign investment service in accordance with the principle of government-led and multi-party participation.

Article 9 The government and its relevant departments shall collectively list the laws, regulations, rules, regulatory documents, policy measures and information on investment projects through the government website and the national integrated online government service platform, and through a variety of channels and methods to strengthen publicity and interpretation, to provide foreign investors and foreign-invested enterprises with consulting, guidance and other services.

Article 10 The special economic areas referred to in Article 13 of the Foreign Investment Law refer to specific areas established with the approval of the state to implement more vigorous opening-up policies and measures.

Where the experimental foreign investment policies and measures implemented by the state in some regions have been proven to be feasible in practice, these policies and measures shall be promoted in other regions or nationwide according to actual conditions.

Article 11 The State shall, in accordance with the needs of national economic and social development, formulate a catalog of industries that encourage foreign investment, setting out specific industries, fields and regions that encourage and guide foreign investors to invest. The catalogue of encouraged industries for foreign investment shall be drawn up by the investment authority of the State Council in conjunction with the commerce department of the State Council and other relevant departments, and it shall be published by the State Council's investment authority and the commerce department after approval by the State Council.

Article 12 Foreign investors and foreign-invested enterprises may enjoy preferential treatment in government-funded, taxation, finance, land use etc., in accordance with laws, administrative regulations or the provisions of the State Council.

Foreign investors who expand their investment in China with their investment income from China shall enjoy the corresponding preferential treatment in accordance with the law.

Article 13 Foreign-invested enterprises can participate in the formulation and revision of national standards, industry standards, local standards, and group standards on an equal basis with domestic-invested enterprises in accordance with laws. Foreign-invested enterprises may formulate enterprise standards on their own or jointly with other enterprises.

Foreign-invested enterprises may put forward proposals of establishment of standard to the standardization administrative department and relevant administrative departments, provide opinions and suggestions in the process of standard establishment, drafting, technical review, feedback and evaluation of standard implementation, and undertake the related works of standard drafting, technical reviews and foreign language translation in accordance with the regulations.

The standardization administrative department and relevant administrative departments shall establish and improve relevant working mechanisms, improve the transparency of standard formulation and revision, and promote the information disclosure of the entire process of standard formulation and revision.

Article 14 The compulsory standards formulated by the state shall be applied equally to foreign-invested enterprises and domestic-funded enterprises, and technical requirements higher than the mandatory standards shall not be specifically applied to foreign-invested enterprises.

Article 15 The government and its relevant departments shall not obstruct and restrict foreign-invested enterprises from freely entering the government procurement market in their region and industry.

The purchasers and procurement agencies of government procurement shall not apply differential or discriminatory treatment to foreign-invested enterprises in the areas of the publication of government procurement information, supplier condition determination and qualification review, and bid evaluation standards, the supplier shall not be restricted by ownership, organization, ownership structure, investor's country, products or service brand and other unreasonable conditions, products and services produced or provided by foreign-invested enterprises within China shall not be treated differently with the domestic-funded enterprises.

Article 16 Foreign-invested enterprises may, in accordance with the provisions of the Government Procurement Law of the People's Republic of China (hereinafter referred to as the Government Procurement Law) and its implementing regulations, make inquiries and questions about government procurement activities to purchasers and procurement agencies, and lodge complaints to government procurement supervision and administration departments. The purchaser, purchasing agency and government procurement supervision and administration department shall make a reply or decision within the prescribed time limit.

Article 17 The government procurement supervision and administration department and other relevant departments shall strengthen supervision and inspection of government procurement activities, correct and investigate and punish violations of laws and regulations such as differential or discriminatory treatment to foreign-invested enterprises in accordance with the law.

Article 18 Foreign-invested enterprises may, in accordance with the law, raise funds through public issuance of securities such as stocks and corporate bonds, as well as public or non-public issuance of other financing instruments and borrowing of foreign debt.

Article 19 Local people's governments at or above the county level may, in accordance with the provisions of laws, administrative regulations, and local regulations, formulate foreign investment promotion and facilitation policies and measures in areas such as fee reductions, land use guarantees, and public service provision.

The formulation of policies and measures by local people's governments at or above the county level for the promotion and facilitation of foreign investment, shall be oriented towards promoting high-quality development, which is conducive to improving economic, social and ecological benefits and continuously optimizing the environment for foreign investment.

Article 20 The relevant competent departments shall prepare and publish guidelines for foreign investment, providing services and facilities for foreign investors and foreign-invested enterprises. The guidelines for foreign investment shall include the introduction to the investment environment, guidelines for foreign investment affairs, information on investment projects, and relevant data and information, and shall be updated in a timely manner.

Chapter III Investment Protection

Article 21 The State shall not apply expropriation on investment of foreign investors.

Under extraordinary circumstances, where the state for the public interest needs to expropriate a foreign investor's investment in accordance with the law, the expropriation shall be conducted in a non-discriminatory manner in accordance with legal procedures and the compensation shall be made timely in accordance with the market value of the expropriated investment.

If the foreign investor is not satisfied with the decision on the expropriation, it may apply for administrative reconsideration or file an administrative lawsuit in accordance with the law.

Article 22 Foreign investors' capital contributions, profits, capital gains, asset disposal income, intellectual property license fees, legally obtained compensation, and liquidation income within China may be freely remitted in Renminbi or foreign exchange according to law, for the remittance, no entity or individual may illegally restrict currency, amount and frequency of remittance.

Wages and other legal income of foreign employees or employees from Hong Kong, Macao and Taiwan of foreign-invested enterprises may be remitted freely in accordance with law.

Article 23 The state strengthens the punishment for intellectual property infringement, continuously strengthens the enforcement of intellectual property rights, promotes the establishment of a rapid and coordinated protection mechanism for intellectual property rights, and improves the pluralistic settlement mechanism for intellectual property disputes, and equally protect the intellectual property rights of foreign investors and foreign-invested enterprises.

If the formulation of standard involving the patents of foreign investors and foreign-invested enterprises, it shall be handled in accordance with the relevant national regulations concerning patents.

Article 24 Administrative organs (including organizations authorized by laws and regulations with the function of managing public affairs, the same below) and their staff are prohibited from using the implementation of administrative licenses, administrative inspections, administrative penalties, administrative coercions, or other administrative means to force or disguised force foreign investors or foreign-invested enterprises to transfer technology.

Article 25 Where the administrative organs perform their duties in accordance with the law and do require foreign investors or foreign-invested enterprises to provide documents and information involving commercial secrets, it shall be limited to the necessary scope for the performance of their duties, the scope of knowledge shall be strictly controlled, and persons who unrelated to the performance of the duties shall not have access to the relevant documents and information.

Administrative organs shall establish and improve internal management regulations, take effective measures to protect the commercial secrets of foreign investors and foreign-invested enterprises known during the performance of their duties; where it is necessary to share information with other administrative organs in accordance with the law, the commercial secrets contained in the information shall be treated confidentially to prevent disclosure.

Article 26 The government and its relevant departments shall, in formulating regulatory documents involving foreign investment, conduct a review of legality in accordance with the provisions of the State Council.

Where foreign investors, foreign-invested enterprises consider that the regulatory documents formulated by the State Council and local people's governments and their departments on which administrative actions are based illegal, when applying for administrative reconsideration or filing an administrative lawsuit against an administrative act according to law, may request that the regulatory documents be reviewed together.

Article 27 The term "commitment on policies" as mentioned in Article 25 of the Foreign Investment Law refers to the written commitments made by the local people's government at all levels and their relevant departments within their statutory authority on supporting policies, preferential treatment and facilities applicable to investments by foreign investors and foreign-invested enterprises in the region. The contents of the commitment on policies shall comply with the laws and regulations.

Article 28 Local people's governments at all levels and their relevant departments shall fulfill the commitments policies made available to foreign investors and foreign-invested enterprises under the law and various types of contracts concluded in accordance with the law, and shall not breach the contract on the grounds of administrative region adjustment, the change of government term, adjustment of institutions or functions, and replacement of relevant responsible persons etc.. Where the commitments on policies or contractual agreements need to be changed for the national interests or social public interests, it shall be conducted in accordance with the statutory authority and procedures, and foreign investors and foreign-invested enterprises shall be compensated the losses they suffered in timely, fair and reasonable in accordance with the laws.

Article 29 The people's governments at or above the county level and their relevant departments shall, in accordance with the principles of openness, transparency, efficiency and convenience, establish and improve the mechanism of complaints and settlement for foreign-invested enterprises, promptly deal with the problems raised by foreign-invested enterprises or their investors, and coordinate and improve relevant policy and measures.

The competent department of commerce under the State Council, in conjunction with the relevant department under the State Council, shall establish an inter-ministerial joint meeting system for complaints from foreign-invested enterprises, coordinating and promoting the handling of complaints from foreign-invested enterprises at the central level, and shall guide and supervise the local government's handling of complaints from freight-invested enterprises.

The competent department of commerce under the State Council and the department or organs designated by the local people's government at or above country-level shall improve the work rules for complaints, improve the complaint methods, and specify the time limit for handling complaints. Complaint work rules, complaint methods, and time limit for complaint handling shall be made public.

Article 30 If foreign-invested enterprises or their investors believe that the administrative actions of the administrative organ and its staff infringe upon their legitimate rights and interests and apply for a coordinated solution through the complaint and settlement mechanism for the foreign-invested enterprises, during coordinating, the relevant department may obtain information from the administrative organs and their staff, and the administrative organs and their staff shall cooperate with the work. The result of coordination shall be promptly notified to the applicant in writing.

Where a foreign-invested enterprise or its investor applies for a coordinated settlement for the relevant issues in accordance with the provisions of the preceding paragraph, it shall not affect its application for administrative reconsideration and the filing of an administrative lawsuit.

Article 31 Where a foreign-invested enterprise or its investor reflects or applies for a coordinated solution to the issues through the complaint and settlement mechanism for foreign-invested enterprises, no organ or individual may suppress or crackdown on retaliation against the foreign-invested enterprise.

In addition to the complaint and settlement mechanism for foreign-invested enterprises, foreign-invested enterprises or their investors may also report problems to the government and relevant departments through other legal channels.

Article 32 Foreign-invested enterprises may establish chambers of commerce or associations in accordance with the law. Except as otherwise provided by laws and regulations, foreign-invested enterprises shall have the right to decide on their own to participate in or withdraw from chambers of commerce or associations, and no organ or individual may intervene.

The Chamber of Commerce and the Association shall, in accordance with the provisions of laws and regulations and articles of association, strengthen the self-discipline of the industry, promptly reflect the industry's demands, and provide members with services such as information consultation, publicity and training, market development, economic and trade exchanges, protection of rights and interests, and dispute resolution.

The state supports chambers of commerce and associations to carry out related activities in accordance with laws, regulations and articles of association.

Chapter IV Investment Management

Article 33 Foreign investors shall no invest in the areas where investment is prohibited under the negative list. Foreign investors shall meet the special management measures, including equity requirements, senior management requirements, which are set forth in the negative list for the admission of foreign investment to invest in the area where investment is restricted under the negative list.

Article 34 In the process of the relevant competent department performing their duties in accordance with laws, if a foreign investor intends to invest in the areas under the negative list, but does not meet the requirements set forth in the negative list, the relevant competent departments shall not handle relevant matters such as permits and business registration; if the approval of fixed assets investment projects involved, relevant approval matters shall not be handled.

The competent authorities shall strengthen supervision and inspection of the implementation of the provisions in the negative list, if the foreign investors invest in areas where investment is prohibited under the negative list, or if the foreign investor's investment activities violate the special management measures for the admission of foreign investment to invest which specified in the negative list, it shall be deal with in accordance with Article 36 of the Foreign Investment Law.

Article 35 Where a foreign investor invests in an industry or sector where legal permission is required investment, except as otherwise provided by laws and administrative regulations, the relevant department responsible for the implementation of permission shall, in accordance with the conditions and procedures equally applied to the domestic investment, review the foreign investors' application for permission, and shall not set discriminatory requirements on foreign investors in terms of permit conditions, application documents, review process, review time etc.

The relevant department responsible for the implementation of permission shall optimize the examination and approval services and improve the examination and approval efficiency in various ways. The permits that meet the relevant conditions and requirements may be handled in the manner of notification and commitment in accordance with relevant regulations.

Article 36 Where a foreign investment is required to go through the approval or investment project filing procedure, it shall be implemented in accordance with relevant state regulations.

Article 37 The registration of foreign-invested enterprises shall be handled by the market supervision and administration department under the State Council or the market supervision and administration department under the local People's government authorized by it in accordance with laws. The market supervision and administration department under the State Council shall publish the list of authorized market supervision and administration departments.

The registered capital of a foreign-invested enterprise may be expressed in RMB or in a freely convertible currency.

Article 38 Foreign investors or foreign-invested enterprises shall report investment information to the competent department of commerce through the enterprise registration system and the enterprise credit information publicity system. The competent department of commerce under the State Council and the department of market supervision and administration shall handle the connection and bridging work of the relevant business systems and provide guidance for the report of investment information to foreign investors or foreign-invested enterprises.

Article 39 The content, scope, frequency and specific procedures of the information report on foreign investment shall be determined and announced by the competent commercial department of the State Council in conjunction with relevant departments such as the market supervision and administration department of the State Council in accordance with the principles of necessity, efficiency and convenience. The competent department of commerce and other relevant departments shall improve information sharing, and the investment information can be obtained through the inter-department sharing system shall not be required to be reported again.

The investment information reported by foreign investors or foreign-invested enterprises shall be true, accurate and complete.

Article 40 The state establishes a foreign investment security review system to conduct security review of foreign investment that affects or may affect national security.

Chapter V Legal Liability

Article 41 If the government and relevant departments and their staff have any of the following circumstances, they shall be held accountable in accordance with the law and regulations.

(1) The relevant policies formulated or implemented do not treat foreign-invested enterprises and domestic-invested enterprises equally in accordance with the law;

(2) illegal restrictions on the right of foreign-invested enterprises to participate in the formulation and revision of standards on an equal basis.

(3) illegally restricting the remittance of foreign investors' funds into and out of China;

(4) Failure to fulfill the commitments on policies made to foreign investors and foreign-invested enterprises according to law and various types of contracts concluded in accordance with the law, making commitments on policies beyond the legal authority, or the content of the commitments on policies do not comply with laws and regulations.

Article 42 Where the purchaser or purchasing agency of government procurement adopts differential or discriminatory treatment on a foreign-invested enterprise on unreasonable terms, it shall be investigated for its legal liability in accordance with the provisions of the Government Procurement Law and its implementing regulations；If it affects or may affect the winning bid or the transaction result, it shall be handled in accordance with the provisions of the Government Procurement Law and its implementing regulations.

Where the government procurement supervision and administration department fail to deal with the complaints of foreign-invested enterprises within the time limit, the persons in charge and other persons directly responsible shall be punished according to law.

Article 43 Where administrative organs and their staff use administrative means to force or disguise foreign investors or foreign-invested enterprises to transfer technology, they shall be punished directly in charge and other persons who are directly responsible. The person in charge directly responsible and other persons directly responsible shall be punished according to law.

Chapter VI Supplementary Provisions

Article 44 Foreign-invested enterprises that have been established before the implementation of the Foreign Investment Law in accordance with the Law of the People's Republic of China on Sino-foreign Equity Joint Ventures, the Law of the People's Republic of China on Wholly Foreign-invested Enterprises, and the Law of the People's Republic of China on Sino-foreign Contractual Joint Ventures (hereinafter referred to as existing foreign-invested enterprises) may, within five years after the implementation of the Foreign Investment Law, adjust their organizational form and organizational structure in accordance with the provisions of the Company Law of the People's Republic of China, the Partnership Law of the People's Republic of China and other laws, and handle the change of registration in accordance with laws, and may also continue to retain the original form of enterprise organization and organizational structure.

Starting from 1 January 2025, the Market Supervision and Administration department will not handle other registration matters for existing foreign-invested enterprises that have not been adjusted their organizational forms, organizational structures, etc. and not registered these changes in accordance with laws and will publicize the relevant status.

Article 45 Specific matters concerning the changes of registration in the organizational form and organization structure of existing foreign-invested enterprises shall be prescribed and announced by the Market Supervision and Administration Department of the State Council. The Market Supervision and Administration Department of the State Council shall strengthen the guidance on the changes of registration work, and the market supervision and administration department in charge of handling the changes of registration shall optimize the services through various methods to facilities the change of registration work for enterprises.

Article 46 After the organization form and organization structure etc. are adjusted in accordance with laws, the parties to the original joint venture and the parties to the cooperation may continue to handle the method for the transfer of equity, the method for the distribution of profits and the method for the distribution of surplus property as agreed in the contract.

Article 47 Where a foreign-invested enterprise invests in China, the relevant provisions of Foreign Investment Law and These regulations shall apply.

Article 48 Investors from the Hong Kong Special Administrative Region and the Macao Special Administrative Region invest in the Mainland, the Foreign Investment Law and These regulations shall be applied as a reference; if the State provides other provisions, such provisions shall be applicable.

Investors from Taiwan invest in the Mainland, the Taiwan Compatriot Investment Protection Law of the People's Republic and its implementing details shall apply; the foreign investment law and These regulations shall be applied as reference in matters which not stipulated in the Investment Protection Law of Taiwan Compatriots and its implemental rules.

Chinese citizens residing abroad invest in China, the Foreign Investment Law and These regulations shall be applied as a reference; if the State provides other provisions, such provisions shall be applicable.

Article 49 These regulations shall come into force on 1 January 2020. The Implementation Regulations of the Law of the People's Republic of China on Sino-Foreign Equity Joint Ventures, the Implementation Regulations of the Law of the People's Republic of China on Wholly Foreign-owned Enterprises, and the Implementation Regulations of the Law of the People's Republic of China on Sino-Foreign Contractual Joint Ventures shall be repealed simultaneously.

If the regulations on foreign investment formulated before 1 January 2020 are inconsistent with the Foreign Investment Law and These regulations, the provisions of Foreign Investment Law and These regulations shall prevail.