▲ Shanghai night view [Pixabay].

COMMENT / Jimena Puga

China's new Foreign Investment Law, which came into force on January 1, 2020, is aimed goal accelerating the country's economic policy reforms to open up the domestic market and eliminate obstacles and contradictions of the previous law. As statement by the President of the People's Republic, the new rule aims to build a market based on stability, transparency, predictability and fair skill for foreign investors. Moreover, the Chinese authorities claim that this new law represents a fundamental part of the State's policy to open up to the world and attract more foreign direct investment.

The draft rule, drafted in 2015, created high expectations among Chinese reformers and foreign investors for a change in the country's foreign investment policy regime. And its publication in 2019, the year at the end of which the President of the United States and the President of the People's Republic agreed to a hiatus in the trade war in which both are protagonists, signaled a breakthrough in this change.

However, the reality is different. Beijing's stance on foreign investment remains significantly different compared to the existing conception of investment in the international arena, but part of the reformist sector of society knows that the government cannot afford to miss the opportunity for improvement following the gradual slowdown of domestic investment in the Chinese market over the past decade.

On the contrary, and taking into account the image that the Empire of the Center has wanted to project to the world since the opening of the regime, it could be thought that President Xi Jinping and the leaders of the Communist Party would have seized the opportunity to give a facelift to a new policy which, compared to the labyrinthine and previous law, would be systematic and perceived in a more friendly way by the investor countries, as a means to revive the decreasing rates of economic progress. The Asian power's new approach to the free market is therefore a smokescreen based on the establishment of protocols that vaguely define the limits of the rights enjoyed by foreign investors.

As a complement to the content of the foreign investment law, the regulation highlights its promotion and protection and details the necessary measures to ensure its effective implementation. It promotes investment by protecting the rights and interests of investors, standardizing the administration of foreign investment, improving the environment of commercial establishments, as well as promoting the advancement of market opening with a broader scope.

Specifically, the provision stipulates that foreign-invested enterprises shall enjoy the same favorable policies as domestic companies. In addition, it details measures to protect business confidentiality and improve the mechanism for the presentation suggestions from foreign firms to the authorities.

It also sets out and clarifies the implementation of a foreign investment negative list mechanism and details the registration and notification system for this investment subject Finally, it also regulates the investment policies for companies established in Hong Kong, Macao and Taiwan, and the legal responsibilities for violations of these regulations.

From a strictly legal point of view, article 2 of the precept defines the concept of foreign investment as "activity of investing directly or indirectly carried out by foreign individuals, companies or other foreign organizations", and also contemplates four circumstances that are considered part of this subject of investment:

• Who establishes a business in the Chinese territory either alone or with another investor

• Whoever acquires participations, shares... or other rights and interests of a business in the territory of China

• Who invests in any new project in China, either alone or with another investor

• Whoever invests in any other manner stipulated by law, administrative regulations or State committee provisions

The term "foreign-investedbusiness " refers to a business incorporated in the Chinese territory under Chinese law and with all or part of its investment financed by a foreign investor.

However, as mentioned above, despite the important innovations of this law, many questions remain unanswered. For example, it does not specify what indirect investment is. Nor does it specify the scope of "foreign natural person": what about Chinese who acquire another nationality, and what about foreigners who acquire Chinese citizenship? In addition, the legislator does not clarify whether investment from Hong Kong, Macao or Taiwan will be considered foreign investment.

Articles 4 and 28 of the new law state that China will adopt the management system of pre-establishment of national treatment (a principle that guarantees foreign investors and their investments access to markets without disadvantages, and therefore under the same conditions as domestic investors). And the Negative List system for foreign investment, which consists of special administrative measures for foreign investment access to certain fields. In other words, the government will treat all foreign investments outside the Negative List as domestic.

This Negative List system was first tested in the Shanghai SEZ and expanded throughout the country in 2018. Both article 4 and 28 clarify that the new Negative List will be promulgated upon agreement of the State committee . This means that neither ministers nor local governments will be able to set restrictions on foreign investment. What's missing? If investors want to access the sectors restricted under the Negative List, they must receive authorization from the Ministry of Commerce, a procedure that the legislator does not include in the rules and regulations

On the other hand, articles 34 and 37 of the new law establish the system of communication on the establishment of new investments for their management and organization.

agreement with these items, foreign investors are obliged to communicate all relevant information to the trading department regulated by the Registration System business or the Credit Information advertising System business . Penalties for non-compliance are also included in these articles. But once again, in this field there is a lack of formal requirements as to how and what content is required for the communication of information to the trading department .

This new turn in economic policy translates, once again, into a strategy by which Beijing intends to project itself on the international scene as a powerful and innovative economic power, trying to hide the slowdown of its domestic market and the damage suffered by the trade war against Washington. However, taking into account the loopholes analyzed in the aforementioned articles and their vague and ambiguous wording, foreign companies will have to wait to determine what this reform really entails after its implementation internship

One Belt-One Road' project aims to consolidate China's rise as a superpower

The ambitious initiative launched by Xi Jinping to connect China with the rest of the Eurasian continent may prove costly and difficult. But unlike the overland route through the Central Asian republics, the sea route may not take long to become a reality on certain stretches, as China has already built some ports on part of the route.

▲The land and sea lanes of the Chinese initiative [yourfreetemplates].

article / Jimena Puga Gómez [English version].

Following Chinese President Xi Jinping's 2013 speech on the revitalization of the ancient Silk Road, the initiative that started out as just an idea has become the Beijing government's biggest economic challenge: a revolution that, if carried out, will change the Asian continent's passenger, freight and hydrocarbon transport infrastructure, as well as high-tech. Dubbed OBOR-OneBelt-One Road, the plan is intended to be the core topic of China's rise as a regional superpower.

The OBOR initiative is a grand plan to redesign China's strategic environment, project Beijing's economic power, secure the communist country's access to energy and mineral supplies, and boost economic growth in the west of the People's Republic. OBOR seeks to achieve these goals by fostering greater and faster connectivity between China and Europe through intermediate points in Central, West and South Asia, as well as with Russia.

For its part, the maritime route that will form one of the core topic of the OBOR initiative, also known as the Silk Road of the 21st century, counts on the fact that seven of the ten largest ports in the world are in China and, as is well known, these infrastructures make the Asian giant an important exporter of port management services. 

The Eastbound Maritime Silk Road will start in Fujian province and pass through Guangdong, Guangxi and Hainan, before heading south to the Strait of Malacca. From Kuala Lumpur, the Route will continue to Kolkata and Colombo, then cross the rest of the Indian Ocean towards Nairobi. From there, it will travel along the Horn of Africa, seeking to cross the strategic Gulf of Aden until it reaches the Red Sea. Beijing's plan aims to create sufficient infrastructure to enable Chinese ships to safely reach the Mediterranean after sailing through the Suez Canal. But the ambition of the People's Republic does not stop at the gates of the European Union, since China wants to reach Athens by sailing the Aegean and from there to Venice, where it will look for land routes that will make it possible to move its goods throughout the Union. Chinese investment has focused, among other things, on the port of Piraeus, with a new logistics center, and on the development of a network of logistics infrastructures through the Balkans and Hungary.

The South Pacific has also been included in this strategic map of routes devised in Beijing. Thus, the maritime Silk Road has two routes. The first, as mentioned above, originates on the east coast of China and, via the South China Sea, aims to establish strategic control of the Spratley Islands, the Strait of Malacca and the entire Indo-Pacific area, including the Bay of Bengal, in order to reach the heart of Europe. The second sea route will also cross the South China Sea to direct its ships to the coastal ports of the South Pacific. With this, China would also control the routes of the essential raw materials that come from Latin American countries.

Although this is a long-term economic project , the Chinese government has already begun the construction of certain infrastructures and the necessary negotiations with various countries. A clear example is Germany. The European Union is China's largest trading partner , while the People's Republic is the Union's second-largest provider . Germany, for sample , not only enjoys an excellent reputation as a reliable partner for China, but is also regarded as "Europe's trade gateway". test of this is that, at a meeting in Duisburg, the world's largest inland port and an important transport and logistics hub in Europe, Chinese President Xi Jinping proposed to Germany "to work together to realize the ambitious project of the revival of the economic belt of the new Silk Road of the 21st century". Germany and China are currently connected by the Chongqing-Xinjiang-Duisburg international railroad line.

The ports built by China at Hambantota and Colombo in Sri Lanka; the China-Suez Economic and Trade Cooperation Zone in Egypt; Kazakhstan's negotiation of the right to clear its imports and exports through the Chinese port of Lianyungang; and a new alliance between ports in China and Malaysia are additional examples of China's ability to leverage its newfound skill as a port modernizer and manager to support its strategy.

The New Silk Road initiative is a project that will require multi-billion dollar investments in order to build smooth, safe and efficient transport infrastructures. The effects of this economic network ensure benefits not only for China, the leader of the OBOR initiative, but also for all the countries affected by it. However, the financing of the project is still an unknown quantity that should be clarified.