Rule of law will boost foreign confidence

The overhaul of the legal system and its strict enforcement will help create a transparent environment for foreign investors and boost their confidence in the Chinese market, said Vaughn Barber, head of China Outbound for KPMG.

"Foreign enterprises need to be guaranteed that problems they encounter in China could be solved according to law," Barber said in an emailed interview with the China Daily website.

Barber attended a briefing about rule of law held by the International Department of the CPC Central Committee on Nov 3.

It is encouraging that the Chinese leadership made a determination on rule of law during the Fourth Plenary Session of the 18th CPC Central Committee, he said.

Foreign companies operating in China will enjoy easier market access and better prospects with the implementation of the decisions made at the fourth plenum, said Zhang Yansheng, secretary general of the academic committee at the National Development and Reform Commission.

The legal system and law enforcement are important aspects of the investment environment for foreign investors in China, Barber said. "If everything is going in accordance with law under a complete legal system, the costs of foreign enterprises will be fixed and controllable, attracting more investment to China".

He also expressed his expectation that the pace of some amendments to laws with regard to foreign investment in China would speed up.

There are three enterprise laws related to foreign investment, namely Law of the People's Republic of China on Foreign-Capital Enterprises, Law of the People's Republic of China on Chinese-Foreign Contractual Joint Ventures and Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, with the first two implemented in 2000 and the third in 2001.

With the rapid development of the Chinese economy and foreign direct investment in the past decade, the three laws can no longer meet the needs of foreign companies and amendments are urgently needed, he said.

Apart from the amendments, law enforcement and supervision are also important issues for China to think through as it implements the decisions of the plenum, Barber added.

He also hopes that foreign companies could have more fair opportunities when participating in the "mixed-ownership" reform of the State-owned enterprises.

As rule of law provides a more open and transparent environment for competition, both foreign and Chinese enterprises will have to improve competitiveness, which will also boost the image of Chinese enterprises in overseas markets, he said.

Improvement of laws and regulations concerning external affairs is also included among the decisions of the plenum.

These steps will be conducive to Chinese companies investing overseas and also better protect the interests of Chinese individuals and corporations overseas, Barber said.

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