In recent years China has evaluated its existing foreign investment policies and developed and implemented a structured rule-based investment management system. Per 1 January 2020 China’s new Foreign Investment Law entered into effect, replacing the 1979 Law on Sino-Foreign Equity Joint Ventures, the 1986 Law on Wholly-Foreign-Owned Enterprises and the 1988 Law on Sino-Foreign Contractual Joint Ventures. The Foreign Investment Law combined with its detailed implementation regulations forms the basic law for foreign investment into China.

In this guidebook China’s foreign investment management system will be introduced aimed to a detailed understanding on how the process of investment into China is structured. The steps to be taken by the foreign investor to determine whether the desired investments are possible and which requirements and conditions might apply is discussed in detail.

China’s new Foreign Investment Law and its Direct Implementation Regulations include multiple provisions on Investment Promotion, of which the implications are discussed in detail in this chapter. First focus goes out to the definitions of Foreign Direct Investment, Reinvestment, and Investment Promotion, followed by the purpose and implementation of Investment Promotion under China’s Foreign Investment Law, and by requirements applicable to local government.

One of the objectives of China’s new Foreign Investment Law is to improve the business environment for foreign invested enterprises and to ensure that these enterprises can operate and compete on an equal basis compared to domestic enterprises. To support this objective the law and Direct Implementation Regulations include multiple provisions on Investment Protection, addressing not only topics including expropriation, international remittance of investors’ interests and the protection of business secrets, but also sets requirements towards PRC government organizations and officials involved in intellectual property, technology transfers, as well as includes provisions on punishment and complaint handling, which are discussed in detail in this guidebook.