EU Firms Fret Over Mainland Investment Bill

European businesses said on Monday that they fear a Chinese foreign investment law allegedly fast-tracked by Beijing to meet Washington's demands on trade has inadequate protections against forced technology transfers.

The law will eliminate the requirement for foreign enterprises to transfer proprietary technology to Chinese joint-venture partners.

It also includes other steps to level the business playing field that Western trading partners have long demanded.

But China's parliament is expected to vote on the legislation in March -- barely two months after debating a first draft -- and the EU Chamber of Commerce in China said it was being fast-tracked, restricting time for foreign businesses to raise objections.

"We are concerned that the drafting of the Foreign Investment Law is being squeezed between the normal legislative process and the negotiation table with the US, in part to address the trade conflict," said Mats Harborn, president of the European Union Chamber of Commerce in China.

Foreign firms worry the draft glosses over details and that vague language leaves room for broad interpretation.

For example, it gives China the right to expropriate foreign investment "for the public interest", which overseas companies fear could be abused.

The window for raising objections on the draft law ended on Sunday.

But China's legislature held a special session in late January for a second reading of the draft law, nearly a month before the deadline for raising objections expired.

Harborn said appropriate consultation periods should be respected, because "this law will have major ramifications for all foreign companies in China for the foreseeable future".

It was only submitted to the legislature for a first reading on December 23, and made available for the public for comment until Sunday.

The parliament is expected to vote on the legislation during its roughly 10-day annual session from March 5.

The United States had been due to increase tariffs on more than US$200 billion in Chinese goods on March 1 - days before the parliament is to vote on the law.

President Trump has now vowed to delay the punitive duties following the "very productive talks."

The new law would replace three existing laws on how foreign companies operate via joint ventures or wholly owned entities. (AFP)