China promises companies ‘we will keep your secrets’ with new foreign investment law
- Updated foreign investment law due to come into effect from January 1, 2020
- Legislation is seen as Beijing’s answer to demand from US President Donald Trump to stop US firms being forced to transfer technologies to local partners
Chinese officials will be obliged to protect commercially confidential information they obtain from overseas businesses, according to the latest draft of China’s new foreign investment law.
Provisions have been added to the legislation which make clear that government employees must keep secret any confidential commercial information from foreign firms and must “not leak or give to others illegally”.
The law, which is due to come into effect on January 1, 2020, will make it illegal for officials to misuse critical information or to provide it to local Chinese firms, on pain of administrative or even criminal punishment. Beijing is also promising a level playing field for investors with the new law, in an effort to reassure the global investment community as China’s attractiveness as an investment destination wanes amid rising costs at home and growing hostilities abroad.
The foreign investment law stipulates clearly that China will give equal treatment to foreign firms in government procurement of not only products, but also services. The earlier draft only mentioned products.
