China’s Investment Law Reform: Revolution or Evolution?

Abstract

This study describes and analyses the recently adopted foreign investment law (the Law) of China. First, this paper presents reasons for the adoption of the Law. For example, we focus on the trade war between the US and China, which has greatly affected the adoption of the Law. The political background that influenced the adoption of the law is revealed. Of note, legal techniques used by the Chinese legislators in the Law are evaluated. For example, a list system for investment sectors is used, which divides all industries into categories with a special regime. This system divides all industries into four categories: (1) encouraged, (2) permitted, (3) restricted, and (4) prohibited. In conclusion, this study emphasizes that changes achieved by the Law are not revolutionary. Some of the consequences that the adoption of the law entails is analyzed. Thus, the Law represents a gradual evolution in how foreign investors access the Chinese economy.