The sixth session of the Standing Committee of the 16th Beijing Municipal People's Congress held its first deliberation for the Regulations of Beijing Municipality on Foreign Investment (Draft) on November 22. In recent years, the important role played by foreign investment in the development of Beijing's open economy has been recognized. During the session, the Beijing Municipal Bureau of Justice said actual utilization of Beijing's foreign investment during the 13th Five-Year Plan period reached USD 79.6 billion, accounting for more than 11.8 percent of the national total. In 2022, that figure reached USD 17.41 billion, up by 12.7 percent year-on-year comparably and 4.7 percentage points higher than the national growth rate.

Promoting investment

Encouraging foreign investment to prioritize strategic emerging industries

To create a fair and competitive market environment, it is essential to remove the hidden barriers impeding foreign investment. The Draft follows provisions of the superior law, calling for Beijing to adopt a pre-access national treatment and a negative list management system for foreign investment in accordance with the law. The negative list for market access, the catalog of prohibited and restricted new industries in Beijing, and administrative licensing specified by laws and regulations apply equally to foreign and domestic enterprises in sectors not included in the negative list. At the same time, the Integrated National Demonstration Zone for Opening up the Services Sector and the China (Beijing) Pilot Free Trade Zone will serve as a testing ground for experimental policies and measures aimed at promoting foreign investment and opening-up, with the ultimate goal of replicating and promoting the experience gained here on a larger scale.

Strategic emerging industries will continue to receive the lion's share of foreign-funded project support. The Draft proposes to encourage and guide foreign investors to invest in Beijing's major development sectors such as strategic emerging industries, high-end manufacturing, and the modern service industry. It also supports the establishment of regional headquarters and various functional organizations for multinational corporations in Beijing, promoting their business development and functional expansion and facilitating their transformation into Asia-Pacific or global headquarters. Finally, qualified foreign investors are encouraged to establish investment companies in Beijing, and enterprises established by their investment are eligible for the same treatment as foreign-funded enterprises under the relevant state regulations.

Protecting investment

Formulating policies and regulations on foreign investment based on a fair competition review

The Draft emphasizes the principle of "equality" by stating that foreign-funded enterprises are subject to the same national and municipal policies supporting enterprise development. It also outlines the need to formulate local laws, regulations, and normative documents applying to foreign investment on the basis of a fair competition review and legality check, taking into account the opinions of foreign-funded enterprises, chambers of commerce, and associations, with necessary adjustment periods before implementation.

In order to improve the protection of intellectual property rights for foreign-funded enterprises, the Draft proposes to incorporate the intellectual property rights protection for foreign investors and foreign-funded enterprises in a rapid collaborative protection mechanism and diversified dispute resolution mechanism while suggesting the same standards of protection as those provided for enterprises funded domestically.

Foreign-funded enterprises will also be ensured the opportunity to participate in government procurement activities through fair competition in accordance with the law, and be supported to participate in the formulation of standards, so as to promote the full process information disclosure of local standards formulation and revision. The relevant authorities will be responsible for investigating and addressing illegal acts, such as the discriminatory treatment of foreign-funded enterprises. Finally, foreign-funded enterprises will have the right to question and complain if they believe that their rights and interests have not been respected during government procurement activities.

Managing investment

Realizing full online registration of foreign-funded enterprises

Registration processes will be further optimized for foreign-funded enterprises. The Draft calls for the authorities under the Municipal Administration for Market Regulation to optimize the registration process of foreign-funded enterprises and improve registration efficiency, establish an alignment and verification mechanism for identity authentication in conjunction with the relevant authorities, so as to realize the entire registration process online. The authorities under the Municipal Administration for Market Regulation should support limited liability companies to seek changes between the type of domestic and foreign enterprise as a result of changes in shareholders.

The Draft also aims to further reduce the burden on enterprises by calling upon the relevant authorities to coordinate their supervision and inspection of foreign-funded enterprises through credit risk classification management and random selection of both inspectors and inspection targets and prompt release of results. Moreover, it advocates for better coordination of enterprise-related law enforcement and inspection in work safety, environmental protection, and product quality to streamline the inspection process and avoid unnecessary repetition.

Facilitating investment

Guaranteeing the free and legal transfer of foreign investment funds

Measures to facilitate the cross-border flow of data and funds have also been further clarified. As outlined in the Draft, Beijing will implement systems for the security assessment of cross-border data transfer for foreign-funded enterprises, the certification of personal information protection, and the filing of standard contracts for cross-border personal information transfer. The authorities under the Cyberspace Administration of Beijing shall, in conjunction with relevant authorities, take measures to open up green channels, carry out cross-border security assessments of important data and personal information for eligible foreign-funded enterprises, and promote the safe, orderly, and free flow of data.

The policy for free cross-border capital flows has been extended from a free trade zone pilot program to cover the entire city. The Draft calls for the city to follow national regulations to allow timely inward and outward remittances of all transfers related to verified and compliant foreign investments. The income and other legal earnings of foreign employees and employees from Hong Kong SAR, Macao SAR, and Taiwan, China in foreign-funded enterprises can be remitted overseas in accordance with the law.

Investment services

Providing whole process services for key foreign-funded projects

"Service" is a frequently mentioned word in the Draft, such as in the integrated "single-window" processing to be adopted for government services, providing market entities with standardized, convenient, and efficient government services. Moreover, the relevant authorities are called upon to determine the acceptance conditions, processes, materials, and other aspects of foreign-related government services and are responsible for keeping the public informed. In terms of communication between the government and enterprises, the People's Government of Beijing Municipality regularly holds high-level dialogues with foreign-funded enterprises to coordinate and solve their important, and often complex, problems. Finally, the relevant authorities and district-level people's governments regularly organize exchanges with foreign-funded enterprises to listen to their opinions and suggestions in person.

To improve the protection and assistance for key projects, the Draft specifically calls for the establishment of a comprehensive service mechanism for important foreign-funded projects, providing full services for negotiating, signing, registering, and projects operation. “Service packages” and “butler services” will be adopted to coordinate and implement service items comprehensively so as to ensure foreign-funded enterprises receive personalized, targeted, and regular services they need.