During the 2019 annual session of the National People's Congress (NPC), a draft of Foreign Investment Law will be submitted for deliberation.

Defined as a fundamental law for the investment of foreign business, its research and revision work started in 2011, followed by the first inspection and comments for the public in 2015. In December 2018, the draft Foreign Investment Law was reviewed. On the same day, the draft was available for public inspection as people were encouraged to leave comments before February 24.

This legislation indicates the Chinese Government's willingness to open up in the next phase and its determination to further reform.

Since reform and opening up, three laws have been introduced to assist foreign businesses, namely Law on Chinese-Foreign Equity Joint Ventures, Law on Non-Equity Joint Ventures (or Contractual Joint Ventures) and Law on Wholly Foreign-Owned Enterprises.

Although some changes have been made in the past 40 years at points such as China's accession to the World Trade Organization, the laws cannot fully adapt to the new era. Hence, voices on replacing the three laws by one were mooted. However, this legislative act is not a simple integration of laws, and the legislative process has been sped up.

The environment of the legislation requires elements including multilateral trade and regional trade systems like TPP, to be taken into account and the legal system must be established for a higher-level bilateral or multilateral trade agreement.

Current Foreign Investment Law draft is relatively brief and focuses only on its legal authority, which is to promote and manage foreign investment and protect foreign business activities. Issues concerned with other existing laws such as Company Law were excluded.

Apart from the demand of reform and opening up, the law also takes responsibility for the promotion of foreign investment, as well as the protection for foreign business investment in China, which is the necessity of this legislation.

(This is an edited excerpt of an article originally published in China Newsweek on February 25)