Implementing Regulations for the PRC Foreign Investment Law

(Promulgated by the State Council on December 26, 2019 and effective as of January 1, 2020.)

Order of the State Council No.723

Part One: General Provisions

Article 1:   These Regulation have been formulated pursuant to the PRC Foreign Investment Law (the FIL).

Article 2:   The state encourages and promotes foreign investment, protects lawful rights and interests relating to foreign investment, regulates the administration of foreign investment, will continuously optimize the foreign investment environment and pushes for greater opening to the outside world.

Article 3:   For the purpose of Items (1) and (3) of the second paragraph of Article 2 of the FIL, the term "other investors" includes PRC natural persons.

Article 4:   The Negative List for Foreign Investment Access (the Negative List) shall be put forward by the State Council department in charge of investment in concert with relevant departments, such as the State Council department in charge of commerce, and submitted to the State Council for issuance or, after approval by the State Council, issued by the State Council departments in charge of investment and commerce.

The state will, in line with the needs of further opening to the outside world and social and economic development, revise the Negative List as appropriate. The preceding paragraph shall apply to the procedure for revising the Negative List.

Article 5:   The State Council departments in charge of commerce and investment, and other relevant departments shall duly jointly carry out the work of promoting, protecting and administrating foreign investment within their respective purviews, by cooperating closely and mutually coordinating.

Local people's governments at the county level and above shall strengthen their organization and guidance of the work of promoting, protecting and administrating foreign investment, support and procure the carrying out of the work of promoting, protecting and administrating foreign investment by relevant departments in accordance with laws and regulations within their respective purviews, and coordinate and resolve, in a timely manner, major issues that arise in the course of the work of promoting, protecting and administrating foreign investment.

Part Two: Promotion of Investment

Article 6:   Governments and their relevant departments shall treat foreign-invested enterprises and Chinese-invested enterprises equally in accordance with the law in terms of government fund allocation, land supply, exemption and reduction of taxes and fees, qualifications/permits, formulation of standards, project filing, human resource policies, etc.

The policies formulated by governments and their relevant departments in support of enterprise development shall be made public in accordance with the law. Where, in the implementation of such policies, enterprises are required to apply for or carry out certain matters, the government and its relevant departments shall make public the conditions, procedure, time limits, etc. for doing so and, in the course of reviews, treat foreign-invested enterprises and Chinese-invested enterprises equally in accordance with the law.

Article 7:   When formulating administrative regulations, rules or regulatory documents concerning foreign investment, or when a government or a relevant department thereof drafts a law or local regulations concerning foreign investment, it shall, based on the actual circumstances, listen to the comments and proposals of foreign-invested enterprises, and relevant chambers of commerce, associations, etc. by various methods such as seeking comments in writing and holding symposiums, verification discussion meetings, hearings, etc.; with respect to comments and proposals that focus on or involve issues of the material rights and obligations of foreign-invested enterprises, feedback on what has been accepted shall be given by appropriate means.

Regulatory documents concerning foreign investment shall be published in accordance with the law in a timely manner, and any such document that has not been published may not serve as a basis for administration. For regulatory documents that have an immediate impact on the production and operating activities of foreign-invested enterprises, the time periods between publication to implementation thereof shall be reasonably determined in light of actual circumstances.

Article 8:   Governments at every level shall establish and improve foreign investment service systems in accordance with the principles of government guidance and multi-party participation, and continuously enhance their foreign investment service capabilities and level.

Article 9:   A government and its relevant departments shall centrally post laws, regulations, rules, regulatory documents and policy measures relating to foreign investment and information on foreign investment projects on a government website or the National Integrated Online Government Service Platform, and strengthen publicization and explanation thereof by various means and methods to provide advice, guidance and other such services to foreign investors and foreign-invested enterprises.

Article 10:   For the purposes of Article 13 of the FIL, the term "special economic area" means a specific area established with the approval of the state wherein policy measures for opening to the outside world are implemented with greater intensity.

Where the state implements pilot policy measures relating to foreign investment in certain regions and finds them to be practicable through practice, it will, in light of actual circumstances, implement the same in other regions or on a nationwide basis.

Article 11:   The state shall, as required for the development of the national economy and society, formulate a catalogue for encouraging foreign investment in industry, enumerating the specific industries, sectors and regions where investment by foreign investors is encouraged and directed. The catalogue for encouraging foreign investment in industry shall be drafted by the State Council department in charge of investment in concert with relevant departments such as the State Council department in charge of commerce, and, after approval by the State Council, issued by the State Council departments in charge of investment and commerce.

Article 12:   Foreign investors and foreign-invested enterprises shall be eligible for favorable treatment in terms of government finances, taxation, finance, land use, etc. in accordance with laws, administrative regulations or State Council provisions.

A foreign investor that expands its investment in China using returns on its investments derived in China shall be eligible for the relevant favorable treatment in accordance with the law.

Article 13:   Foreign-invested enterprises shall participate in the formulation and revision of state standards, industry standards, local standards and association standards on an equal footing with Chinese-invested enterprises in accordance with the law. A foreign-invested enterprise may, as required, formulate enterprise standards itself or do so in concert with other enterprises.

A foreign-invested enterprise may propose to the competent standards administrative department and relevant competent administrative departments the establishment of a standard, and give its comments and suggestions in the course of the standard proposal, drafting, technical review, and feedback and assessment on the standard implementation, and undertake, in accordance with provisions, work related to drafting of the standard and technical review and the work of translating the standard into a foreign language.

The competent standards administrative department and relevant competent administrative authorities shall establish and improve the relevant work mechanisms, increase the transparency of standards formulation and revision, and promote the disclosure of information throughout the standards formulation and revision process.

Article 14:   Mandatory standards formulated by the state shall apply equally to foreign-invested enterprises and Chinese-invested enterprises, and technical requirements more stringent than those of a mandatory standard may not be applied exclusively to foreign-invested enterprises.

Article 15:   A government and its relevant departments may not hinder or restrict foreign-invested enterprises from freely entering the government procurement market of the region or industry in question.

The procuring entity or procurement agent in government procurement may not subject foreign-invested enterprises to differential or discriminatory treatment in terms of the publication of government procurement information, determination of supplier conditions, qualification review, bid evaluation criteria, etc., may not restrict suppliers by form of ownership, organizational form, equity structure, investor nationality, product or service brand or other unreasonable condition, and may not accord treatment to the products produced or services offered in China by foreign-invested enterprises that differs from that accorded to those of Chinese-invested enterprises.

Article 16:   A foreign-invested enterprise may make inquiries or address questions to the procuring entity or procurement agent about government procurement activity matters and lodge complaints with the government procurement regulator in accordance with the PRC Government Procurement Law (the Procurement Law) and its Implementing Regulations. The procuring entity, procurement agent or government procurement regulator shall give its response or render its handling decision within the specified period of time.

Article 17:   A government procurement regulator and other relevant departments shall strengthen their monitoring inspections of government procurement activities, and remedy, investigate and handle, in accordance with the law, acts in violation of laws or regulations of subjecting foreign-invested enterprises to differential or discriminatory treatment.

Article 18:   Foreign-invested enterprises may seek financing in accordance with the law by means such as the public offering of securities such as stocks and corporate bonds in China or abroad, the public or private offering of other financing instruments, and the taking out of foreign debt.

Article 19:   A local people's government at the county level or above may, ex officio, pursuant to laws, administrative regulations and local regulations, formulate policy measures to promote and facilitate foreign investment, such as those on the reduction or waiving of fees, assurance of land use indicators and provision of public services.

A local people's government at the county level or above that formulates policy measures to promote and facilitate foreign investment shall be guided by the promotion of high quality development, with the same being conducive to enhancing economic, social and ecological benefits and conducive to sustained optimization of the foreign investment environment.

Article 20:   Relevant competent departments shall compile and publish foreign investment guides to provide services and convenience to foreign investors and foreign-invested enterprises. A foreign investment guide shall include a description of the investment environment, guidelines on handling matters relating to foreign investment, information on investment projects and related data and information, and the same shall be updated in a timely manner.

Part Three: Protection of Investment

Article 21:   The state shall not subject the investments of foreign investors to requisitioning.

Under special circumstances, when the state requisitions the investment of a foreign investor in the public interest in accordance with the law, it shall do so by the statutory procedure in a non-discriminatory manner, and compensate the investor at the market value of the requisitioned investment in a timely manner.

If a foreign investor is dissatisfied with a requisition decision, it may apply for administrative reconsideration or institute an administrative action in accordance with the law.

Article 22:   A foreign investor's capital contribution, profits, capital returns, proceeds from the disposal of assets, royalties derived from the licensing of intellectual property, compensation or indemnities obtained in accordance with the law, liquidation proceeds, etc. in China may be freely remitted inward or outward in renminbi or foreign exchange in accordance with the law, and no entity or individual may unlawfully restrict the currency, amount or frequency of inward or outward remittance.

The wage income and other lawful income of foreign employees and Hong Kong, Macao and Taiwan employees of a foreign-invested enterprise may be freely remitted abroad in accordance with the law.

Article 23:   The state is intensifying the punishment of intellectual property infringement, continuously strengthens the enforcement of intellectual property laws, promotes the establishment of a rapid coordinated intellectual property protection mechanism, improves diversified mechanisms for the resolution of intellectual property disputes and gives equal protection to the intellectual property of foreign investors and foreign-invested enterprises.

Where the formulation of a standard involves a patent of a foreign investor or foreign-invested enterprise, matters shall be handled in accordance with relevant administrative provisions for standards involving patents.

Article 24:   An administrative authority (here and hereinafter including an organization authorized by laws or regulations with the function of administering public affairs) and its working personnel may not leverage the imposition or conduct of administrative permissions, administrative inspections, administrative penalties, administrative enforcement or other administrative means to compel or compel in a disguised manner a foreign investor or foreign-invested enterprise to transfer technology.

Article 25:   If an administrative authority, in lawfully performing its duties, genuinely requires a foreign investor or foreign-invested enterprise to provide materials or information that involves its trade secrets, it shall limit the same to the extent required for the performance of its duties and strictly control the scope of those privy thereto, such that persons with no role in the performance of such duties may not access the relevant materials or information.

An administrative authority shall establish and improve its internal management systems and take effective measures to protect the trade secrets of foreign investors and foreign-invested enterprises to which it is privy in the course of performing its duties. Where the sharing of information with other administrative authorities is required in accordance with the law, it shall treat the trade secrets contained in the information as confidential and guard against the leakage thereof.

Article 26:   When a government and its relevant departments formulate regulatory documents relating to foreign investment, they shall conduct a lawfulness review in accordance with State Council provisions.

If a foreign investor or foreign-invested enterprise is of the opinion that a regulatory document formulated by a State Council department, a local people's government or a department thereof and on which an administrative act is based is unlawful, it may, while applying for administrative reconsideration or instituting an administrative action in respect of the administrative act in accordance with the law, additionally request a review of the regulatory document in question.

Article 27:   For the purposes of Article 25 of the FIL, the term "policy undertaking" means a written undertaking given ex officio by a local people's government at any level or a relevant department thereof in respect of the supportive policies, available preferential treatment and facilitation conditions, etc. applicable to investments by foreign investors and foreign-invested enterprises in the region in question. The contents of a policy undertaking shall comply with laws and regulations.

Article 28:   A local people's government at any level and its relevant departments shall perform the policy undertakings given to foreign investors and foreign-invested enterprises in accordance with the law and the various contracts into which they enter in accordance with the law, and may not breach or renege on such an undertaking on the grounds of a revision of administrative divisions, change in government, adjustment of an agency or function, or replacement of the relevant person in charge, etc. If a policy undertaking or the provisions of a contract need to be revised in the national interest or the public interest, the same shall be done ex officio by the statutory procedure, and fair and reasonable compensation shall be paid in a timely manner in accordance with the law for the losses incurred by foreign investors and foreign-invested enterprises as a result thereof.

Article 29:   A people's government at the county level or above and its relevant departments shall, in accordance with the principles of openness, transparency, efficiency and convenience, establish and improve a mechanism for foreign-invested enterprise complaint work, resolve issues reported by foreign-invested enterprises or their investors in a timely manner, and coordinate and improve the relevant policy measures.

The State Council department in charge of commerce, in concert with relevant departments of the State Council, shall establish a joint inter-department conference system for foreign-invested enterprise complaint work, coordinate and drive foreign-invested enterprise complaint work at the central government level, and guide and monitor local foreign-invested enterprise complaint work. A local people's government at the county level or above shall designate a department or agency to be responsible for accepting complaints from foreign-invested enterprises and their investors in its region.

The State Council department in charge of commerce or the department or agency designated by a local people's government at the county level or above shall improve the complaint work rules, improve the methods of lodging complaints and expressly specify the period for handling complaints. The complaint work rules, methods of lodging complaints and time limits for handling complaints shall be made public.

Article 30:   If a foreign-invested enterprise or its investors are of the opinion that an administrative act by an administrative authority or its working personnel infringes upon its or their lawful rights and interests, and apply for reconciliation and resolution through the mechanism for foreign-invested enterprise complaint work, the relevant party, when carrying out reconciliation, may apprise itself of the circumstances from the responding administrative authority and its working personnel, and such administrative authority and its working personnel shall offer their cooperation. The applicant shall be informed of the outcome of the reconciliation in writing in a timely manner.

Where a foreign-invested enterprise or its investors apply for reconciliation and resolution of a relevant issue in accordance with the preceding paragraph, the same shall not prejudice its or their application for administrative reconsideration or institution of an administrative action in accordance with the law.

Article 31:   Where a foreign-invested enterprise or its investors report an issue or apply for reconciliation and resolution thereof through the mechanism for foreign-invested enterprise complaint work, no entity or individual may suppress the same or retaliate.

In addition to the mechanism for foreign-invested enterprise complaint work, a foreign-invested enterprise or its investors may report issues to the government and its relevant departments by other lawful means.

Article 32:   Foreign-invested enterprises may establish chambers of commerce and associations in accordance with the law. Unless otherwise provided in laws or regulations, a foreign-invested enterprise has the right to decide at its own discretion to join or withdraw from a chamber of commerce or association, and no entity or individual may interfere therein.

A chamber of commerce or association shall, in accordance with laws, regulations and its charter, strengthen industry self-regulation, reflect industry requests in a timely manner and provide services such as information consulting, publicity, training, market development, trade exchanges, protection of rights and interests, and dispute resolution to its members.

The state supports the conduct, in accordance with laws, regulations and their charters, of relevant activities by chambers of commerce and associations.

Part Four: Administration of Investment

Article 33:   Foreign investors may not invest in sectors the investment in which is prohibited by the Negative List. Where an investor invests in a sector the investment in which is restricted by the Negative List, it shall comply with the restrictive special administrative measures for access specified in the Negative List, such as equity requirements and requirements on senior management personnel.

Article 34:   In the course of performing its duties in accordance with the law, a relevant competent department shall not carry out permissions, enterprise registration or other such relevant matters for a foreign investor that proposes to invest in a sector enumerated on the Negative List but does not comply with the provisions of the Negative List; where approval for a fixed asset investment project is involved, it shall not carry out the relevant approval matters.

A relevant competent department shall strengthen its monitoring inspections of the implementation of Negative List provisions, and if it discovers that a foreign investor has invested in a sector the investment in which is prohibited by the Negative List or that the investment activities of a foreign investor violate the restrictive special administrative measures for access specified in the Negative List, it shall handle the same in accordance with Article 36 of the FIL.

Article 35:   Where a foreign investor invests in an industry or sector requiring the securing of permission in accordance with the law, the relevant competent department responsible for granting such permissions shall, unless otherwise provided in laws and administrative regulations, review the foreign investor's permission application on conditions and by a procedure consistent with that for Chinese investment, and may not set discriminatory requirements in terms of permission conditions, application materials, review stages, review period, etc. for foreign investors.

A relevant competent department responsible for granting permissions shall optimize its examination and approval services, and enhance approval efficiency by various means. With respect to a permission matter that satisfies relevant conditions and requirements, it may handle the same by the notification and undertaking method in accordance with relevant provisions.

Article 36:   Where a foreign investor is required to carry out check and approval or record filing for an investment project, matters shall be handled in accordance with relevant state provisions.

Article 37:   The registration of foreign-invested enterprises shall be carried out in accordance with the law by the State Council's market regulation department or the market regulation department of the local people's government authorized by it. The State Council's market regulation department shall publish its list of authorized market regulation departments.

The registered capital of a foreign-invested enterprise may be expressed either in renminbi or in a freely convertible currency.

Article 38:   A foreign investor or foreign-invested enterprise shall submit investment information to the department in charge of commerce through the enterprise registration system and enterprise credit information publication system. The State Council departments in charge of commerce and market regulation shall duly carry out the connection of relevant business systems and harmonization of the work, and provide guidance to foreign investors and foreign-invested enterprises on the submission of investment information.

Article 39:   The content, scope, frequency and specific procedures for the reporting of foreign investment information shall be determined and published by the State Council department in charge of commerce, in concert with relevant departments such as the State Council's market regulation department, based on the principles of genuine necessity, efficiency and convenience. Departments in charge of commerce and other relevant departments shall strengthen information sharing, and foreign investors and foreign-invested enterprises may not be required to again submit investment information that can be obtained through inter-department information sharing.

The investment information submitted by foreign investors and foreign-invested enterprises shall be true, accurate and complete.

Article 40:   The state shall establish a foreign investment security review system and conduct security reviews of foreign investments that affect or could affect national security.

Part Five: Legal Liability

Article 41:   If any of the following circumstances applies to a government, a relevant department thereof or a member of its working personnel, its/his/her liability shall be pursued in accordance with laws and regulations:

(1)   in formulating or implementing relevant policies, failing to treat foreign-invested enterprises and Chinese-invested enterprises equally in accordance with the law;

(2)   illegally restricting foreign-invested enterprises from participating on an equal footing in the formulation or revision of standards, or applying exclusively to foreign-invested enterprises technical requirements more stringent than those of a mandatory standard;

(3)   illegally restricting foreign investors from remitting funds inwards and/or outwards; or

(4)   failing to perform policy undertakings given to, or various contracts entered into with, foreign investors or foreign-invested enterprises in accordance with the law, giving policy undertakings exceeding its statutory authority or the content of its policy undertakings failing to comply with laws or regulations.

Article 42:   If the procuring entity or procurement agent in government procurement subjects foreign-invested enterprises to differential or discriminatory treatment by setting unreasonable conditions, its legal liability shall be pursued in accordance with the Government Procurement Law and its Implementing Regulations. If the same affects or could affect the awarding of the bid or transaction outcome, the same shall be handled in accordance with the Government Procurement Law and its Implementing Regulations.

If a government procurement regulator fails to deal with the complaint of a foreign-invested enterprise within the time limit, the officer directly in charge and other directly responsible persons shall be disciplined in accordance with the law.

Article 43:   If an administrative authority or a member of its working personnel leverages administrative means to compel or compel in a disguised manner a foreign investor or foreign-invested enterprise to transfer technology, the officer directly in charge and other directly responsible persons shall be disciplined in accordance with the law.

Part Six: Supplementary Provisions

Article 44:   A foreign-invested enterprise established in accordance with the PRC Sino-Foreign Equity Joint Venture Law, the PRC Wholly Foreign-Owned Enterprise Law or the PRC Sino-Foreign Cooperative Joint Venture Law prior to the implementation of the FIL (an Existing FIE) may, within five years after the implementation of the FIL, revise its organizational form, organizational structures, etc. in accordance with laws such as the PRC Company Law and the PRC Partnership Law and carry out the amendment of registration in accordance with the law, or it may continue to maintain its current organizational form, organizational structures, etc.

Commencing from January 1, 2025, the market regulation department shall not carry out other registration matters applied for by an Existing FIE that has not revised its organizational form, organizational structures, etc. or carried out amendment of registration in accordance with the law, and shall announce the relevant circumstances.

Article 45:   Specific matters concerning the carrying out of registration amendments of an Existing FIE relating to its organizational form, organizational structures, etc., shall be provided for and published by the State Council's market regulation department. The State Council's market regulation department shall strengthen its guidance for the work associated with the amendment of registration, and a market regulation department responsible for handling amendment of registration shall optimize its services through various means so as to facilitate the carrying out of amendment of registration by enterprises.

Article 46:   Once the organizational form, organizational structures, etc. of an Existing FIE have been revised in accordance with the law, the method of transferring equity or equity interests, the method of distributing profits, the method of distributing remaining property, etc. provided for in the contract by the former equity joint venture or cooperative joint venture parties may continue to be handled in accordance with such provisions.

Article 47:   Investments in China by foreign-invested enterprises shall be governed by relevant provisions of the FIL and these Regulations.

Article 48:   Investments in mainland China by investors from the Hong Kong Special Administrative Region and Macao Special Administrative Region shall be handled with reference to the FIL and these Regulations. If laws, administrative regulations or the State Council provide otherwise, such provisions shall be complied with.

The investment in mainland China by investors from Taiwan shall be governed by the PRC Law on the Investment Protection for Taiwanese Compatriots (the Taiwan Investment Law) and its Implementing Rules. Where the Taiwan Investment Law and its Implementing Rules are silent on a matter, such matter shall be handled with reference to the FIL and these Regulations.

Where a Chinese citizen permanently resident abroad invests in China, matters shall be handled with reference to the FIL and these Regulations. If laws, administrative regulations or the State Council provide otherwise, such provisions shall be complied with.

Article 49:   These Regulations shall be effective as of January 1, 2020. The Implementing Regulations for the PRC Sino-Foreign Equity Joint Venture Law, the Tentative Provisions for the Joint Venture Term of Sino-Foreign Equity Joint Ventures, the Implementing Rules for the PRC Wholly Foreign-Owned Enterprise Law and the Implementing Rules for the PRC Sino-Foreign Cooperative Joint Venture Law shall be repealed simultaneously.

In the event of a discrepancy between a provision on foreign investment formulated before January 1, 2020 and the FIL or these Regulations, the FIL or these Regulations shall prevail.