China is all set pass a new foreign investment law to provide a level playing field to global investors with legal safeguards on IPR and technology transfer, some of the main demands of US President Donald Trump to end the trade war between the world's two largest economies.
The US and China are locked in a trade war since Trump imposed heavy tariffs on imported steel and aluminium items from China in March last year, a move that sparked fears of a global trade war. In response, China imposed tit-for-tat tariffs on billions of dollars worth of American imports.
China is the world's second largest economy after the US.
The draft foreign investment law will be submitted to the top legislature, the National People's Congress (NPC), for review on March 8 and put for vote on March 15, Zhang Yesui, spokesman of the NPC said on Monday.
Asked why China is passing the new foreign investment law in a hurry, Zhang said that the interests of China and the United States are deeply interwoven and a confrontational China-US relationship does not benefit anyone.
China has a clear policy towards its relationship with the US, which is based on no-conflict and no-confrontation, mutual respect and win-win cooperation, he said.
The adoption of the foreign investment law is an innovation in the legal system on foreign investment and is to replace the existing three laws and serve as the basic law on foreign investment as China continues to open up in the new era, Zhang said.
The draft foreign investment law clearly stipulates that foreign investment in China will be subject to pre-established national treatment plus a negative list management system and the case-by-case approval management mode will be abolished, he said.
According to the draft law, industries where foreign investment is prohibited or restricted are specified in the negative list. Industries that are not on the list will be fully open, with domestic and foreign firms enjoying the same treatment.
"This is a fundamental change in China's foreign investment management system, and help create a more open, transparent and predictable environment for investors and provide stronger legal guarantee on China's new opening-up," Zhang said.
The draft law also has clear positions on the protection of foreign investors' rights regarding issues such as IPR protection and technology transfer that are of common concern to foreign investors, he said.
"The new issues should not be dealt with cold war mentality against the background of globalisation," he said.
Differences in such areas as history, culture, political system and development stages between the two countries are very normal, but the differences do not necessarily have to lead to confrontation and conflicts, Zhang said, adding that cooperation is the best choice for China and the US.
At the same time, China firmly safeguards its own territorial safety and interests for development, he said.
In terms of the China-US trade talks, Zhang said he hopes that the working teams of both sides could step up consultations and reach an agreement with win-win results since the bilateral trade ties are mutually beneficial in nature.
The most important thing now is honestly implementing the consensus reached by the leaders of the two countries and expand cooperation on the basis of managing and controlling disputes, thus indicating direction for the development of bilateral ties in the next period, he added.
The new investment law providing a level-playing field to foreign investors with all rights was being passed by China in a record time to end the trade war which is badly affecting Beijing.
The NPC is often regarded as the rubber-stamp Parliament for its routine approval of the proposals of the ruling Communist Party of China (CPC).
The NPC, with over 2,900 deputies, and the advisory body the Chinese People's Political Consultative (CPPCC), are holding their annual sessions in Beijing.
While the CPPCC with over 2,000 delegates began its session, the NPC will start its 10-day session on Tuesday during which Premier Li Keqiang would submit the government's work report of last year and plans for this year.
Trump is asking China to reduce the USD 375 billion trade deficit, provide legal protection for Intellectual Property Rights (IPR), technology transfer and more access to American goods to Chinese markets.
He has already increased tariffs on over USD 250 billion worth of Chinese exports to the US and threatened to extend tariffs on USD 200 billion imports to 25 per cent.
Trump has extended the March 1 deadline to impose further tariffs on the rest of the Chinese goods. Both the countries are holding intense talks to end the deadlock.