Date
25 July 2017
China's proposed national security law, expected to be passed this year, poses obstacles to investment, according to US companies. Photo: Internet
China's proposed national security law, expected to be passed this year, poses obstacles to investment, according to US companies. Photo: Internet

China rules worry US investors before treaty talks

United States investors are worried about emerging Chinese regulations even before Beijing and Washington begin talks on an investment treaty.

The two sides are expected to press each other over certain demands as early as Monday, according to Reuters.  

The world’s two largest economies will outline industry sectors that each side deems to be closed to the other side’s investors.

Such “negative lists”, which define the scope of the treaty, are already months overdue.

China has more restrictions on foreign investment than the United States.

US investors hope that a treaty will give them increased access to China’s many tightly controlled industries, from financial services to healthcare.

But three sources familiar with the process say US negotiators expect Beijing to come up with an expansive “negative list”, noting that it has pursued in recent months new rules that could further restrict foreign access to sensitive sectors.

“After 35 years of reform and opening in China, there are enough data points out there to suggest we are now seeing a reversal,” one source said.

Beijing’s commerce ministry could not be reached for comment but it has said foreign investors enjoy ample opportunity in China.

Beijing has also complained of restrictions on Chinese investment in US infrastructure and technology and says its firms are singled out in US national security reviews.

However, China is pursuing legislation, including rules on national security and non-governmental organizations (NGOs) which are seen as aggressive and overreaching by some within the foreign business community.

For example, China’s draft National Security Law and Anti-terrorism Law, which could be adopted this year, call for the use of “secure and controllable” technology developed in China or which uses source code released to Chinese inspectors.

Another pending law on foreign NGOs, which includes myriad business groups, would give police broad supervisory power over their budgets, agendas and personnel decisions.

– Contact us at [email protected]

RA

EJI Weekly Newsletter

Please click here to unsubscribe