Beijing Adopts Its First Special Regulation on Foreign Investment

The Beijing Regulation on Foreign Investment was released on the website of the Standing Committee of Beijing Municipal People’s Congress. As the first special regulation on foreign investment in the capital city, the document features creating a more transparent and expectable market environment for foreign investment, to be effective on July 1, 2024.

Consisting of 44 articles in seven chapters, the document designs systems with respect to policy-making, government procurement, government’s fulfillment of promises, cross-border data flow, foreign exchange facilitation, intellectual property right protection, introduction of technical talent, and government-enterprise communication mechanism. It said that Beijing will implement the pre-establishment national treatment plus negative list management system for foreign investment, establish an identity authentication and verification mechanism for foreign investors and a mutual recognition mechanism of entity’s qualifications between different regions, and realize online handling of the whole process of registration. The city will make it more convenient for qualified foreign investors to conduct outbound security assessments of important data and personal information, and explore creating a list of general data that can flow freely. The free trade zone in the city may prepare the list of important data that shall be subject to the outbound transfer management according to the law. The document also encourages foreign-funded enterprises to reinvest their profits by implementing supporting policies as same as those for newly added foreign investment. For reinvestment made by foreign investors with profits earned in the Chinese mainland, the city will implement the policy of exempting the withholding income tax on a temporary basis according to national rules. Where a project invested by a Chinese domestic reinvestment enterprise of a foreign-funded enterprise meets the requirements of the national Catalogue of Industries for Encouraged Foreign Investment, it would enjoy the duty-free policy for imported self-use equipment according to applicable national rules.