China investment policy – ensuring the mice will be caught

Abstract

Purpose This article analyses China’s attempts at economic revival, which, starting with the Foreign Investment Law, were under way before COVID-19 but which were given extra impetus by the onset of the pandemic. Design/methodology/approach The thought is that the Foreign Investment Law lacks detail, so this article looks at the three ideas with which the State Council is seeking to underpin it: key Industries, promoting investment and equal treatment. It also considers Shanghai’s experience as the first major municipality to implement the State Council’s guidance. Findings China is committed to more transparency and to opening more of its economy to foreign investors, even if it will continue to be selective about which industries it wishes to encourage. The central government wants other regional and local jurisdictions to follow Shanghai’s lead and implement its guidance, as well as bring forward more measures to make the environment more favorable for foreign investment. At the same time, the article notes that China faces some hostility from other nations and groupings, such as the US, UK and the EU, from which it would expect to receive investment. Practical implications Investors can expect more specific reforms in the different areas of the economy that China wishes to develop while recognizing that it needs foreign expertise to do so. Originality/value Insight from experienced corporate lawyers who are resident in China and have first-hand experience of the measures aimed at economic recovery.