On September 3, the Ministry of Commerce issued the Interim Record Management Measures for the Establishment and Change of Foreign Invested Enterprises (Draft), and asked for opinions from the public. The Spokesman of Ministry of Commerce Sun Jiwen commented on this.

Sun Jiwen said that building Free Trade Pilot Zones (hereinafter referred to as Pilot FTZ) is a new channel for the Central Party Committee and the State Council to comprehensively deepen reform and expand opening up facing the new situations. It is also an important measure to accumulate new experience, and a typical measure to speed up the structural reform of supply. To implement the requirements of the Third Plenary Session of 18th CPC of “reforming the approval system of foreign investment” and “exploring the management mode of Pre-Establishment National Treatment plus Negative list to foreign investment”, and after being authorized twice by the Standing Committee of the National People’s Congress, the Ministry of Commerce implemented the management mode of Pre-Establishment National Treatment plus Negative List consecutively in Shanghai, Guangdong, Tianjin and Fujian Pilot FTZs since October 2013. The establishment and change of foreign-invested enterprises which are not involved in the list of special entry management by the government regulations will be changed from permission approval to record filing control.

Sun Jiwen pointed out that in the recent 3 years, the implementation of the management mode of negative list for foreign investment has largely promoted the level of facilitation and standardization of investment in pilot FTZs. In January-June this year, 99% of the foreign invested enterprises in the four FTZs were established through filing management. Compared with the system of “approval case by case”, paper materials were reduced about 90%, and the managing time limit was reduced to within 3 workdays from 20 workdays, gaining wide acknowledgement. The pilot FTZs established the on-site and post supervision system in accordance with the management mode of negative list. The national security review system of foreign investment was well operated. The four FTZs introduced some practices like integrity commitments before, evaluating and classifying in process, giving rewards and punishment afterwards, and forming a supervision pattern that the law-abiding enterprises would operate smoothly but the law-breaking enterprises will be regulated. During the 3 years, the pilot FTZs guarded the bottom line of risks, and no regional and systematic risks have occured. The third-party evaluation organizations like the Development Research Center of the State Council thinks that, the reform demonstration of management system for foreign investment in the pilot FTZs has the conditions to be promoted in the whole country because it has wide benefits, obvious achievements and controlled risks.

Sun emphasized that, on September 3, the 22nd Session of the 12th National People's Congress approved the Decision of the Standing Committee of the National People's Congress on Amending Four Laws Including the Law of the People's Republic of China on Foreign Capital Enterprises (hereinafter referred to as the Decision). The Decision will amend the administrative examination and approval articles of Law of the People's Republic of China on Foreign Capital Enterprises, Law of the People’s Republic of China on Sino-Foreign Equity Joint Ventures, Law of the People’s Republic of China on Sino-Foreign Contractual Joint Ventures and the Law of the People's Republic of China on the Protection of Investments of Taiwan Compatriots. The establishment and change of foreign-invested enterprises and Taiwan invested enterprises not on the list of special entry management by the government regulations will be changed from permission approval to record filing control. It is an important reform to amend the four regulations and implement the management mode of pre-establishment national treatment plus negative list in the whole country. It reflects the spirit that all the important reforms have legal basis. We will continue to expand opening up, and optimize a legalized, international and facilitated business environment.

In order to guarantee the good implementation, the Ministry of Commerce drafted the Interim Management Measures for Foreign-invested Enterprises to Establish and Change Record(draft) (hereinafter referred to as the draft) after soliciting opinions from the relevant departments and local commercial departments. The draft will carry out the central government’s requirements of streamlining administration and delegating power to lower-level governments, delegating power and strengthening regulation, and intensifying collaborative supervision. It also regulates its range of application, record filing procedures, supervision and check, and legal responsibility. Investors from Hong Kong, Macao and Taiwan have to prepare all their investment record filings according this draft.

As to streamlining administration, according to the draft, those foreign investors who are not included by China’s special administrative management of admittance don’t need any approval and only need to be put on record, which means the completion of the procedure of the record filing and changing. Foreign-funded enterprises or investors could register online and submit necessary information and materials through registration system. The responsible commercial departments (hereinafter referred to as the registration institutions) will finish the filing within three working days and release the result via the registration system. The filing of foreign-funded enterprises may be handled within 30 days after the business license is issued. The modifications of registration items of foreign-funded enterprise will be accepted within 30 days after the items happened, and registration is not the prerequisites for business registration. After the registration, the enterprises could choose to take or not to take the record receipt at will. It will streamline the procedures and improve investment facilitation level.

On delegating power and strengthening regulation, the draft contains comprehensive clauses on monitoring and legal responsibility. While delegating power, it also provides basis and means for registration institutions to strengthen in-progress and after the registration monitoring. Foreign-funded enterprises or investors who do business in restrictive or prohibited areas, or refuse to be cooperative when being monitored will undertake legal responsibility, its credit record will be listed to MOFCOM credit filing system for foreign investment, and given public notification through foreign investment information public system.

On intensifying collaborative supervision, the draft clarifies that registration institutions will support departments of industry and commerce, and departments of foreign exchanges to strengthen information sharing. Registration institutions will notify the relevant departments of any illegal behaviour surpassing the management duties of foreign-funded enterprises or investors.

Sun Jiwen pointed out that the decision to revise 4 laws including Law of the People’s Republic of China on Foreign-Capital Enterprises will be carried out from October 1, 2016. To avoid the lack of supervision and make cohesion well, regulation on the establishment and modification of foreign-funded enterprises will be implemented as important supportive measures to the decision simultaneously. The Ministry of Commerce welcomes the attention and valuable opinion from the publia. We will listen to the public opinion, make further improvement to guarantee the smooth implementation of the negative list nationwide.