Beijing: China has unveiled a draft foreign investment law, making provision for wholly foreign-owned enterprises with legal cover for overseas investments and technology - a key demand of US President Donald Trump to end the trade war between the world's two largest economies.
The draft foreign investment law will be submitted to the upcoming plenary session of the National People's Congress (NPC), the rubber stamp parliament, scheduled to be opened on March 5.
The decision was made by the NPC Standing Committee on Wednesday at a closing meeting of its two-day session, state-run Xinhua news agency reported.
Once adopted, the unified law will replace three existing laws on Chinese-foreign equity joint ventures, non-equity joint ventures (or contractual joint ventures) and wholly foreign-owned enterprises.
The proposed law was expected to end forced technology transfer for foreign investors in China, which is one of the demands of Trump.
The foreign investment law will be a basic law in that field, and its drafting is an important move in implementing the strategy of further opening-up made by the ruling Communist Party of China, the report said.
The drafting of the foreign investment law is also necessary in help with China's efforts to attract more foreign investment, protect foreign investors' legitimate rights and interests, foster an environment favorable to doing business, as well as provide legal guarantee to opening-up at a higher level, according to the document.
"China will not close its door to the world; but will only become more and more open," said Li Zhanshu, chairman of the NPC Standing Committee.
Plans to bring about a foreign investment law was announced as Chinese Vice Premier Liu He is set to hold two-day talks with his American counterpart Robert Lighthizer on January 30-31 in Washington to work out a crucial deal to end the trade war. Liu is heading a 30-member delegation.
Trump has been pressing China to bring down USD 375 billion trade deficit in the bilateral trade, which he attributes to unfair trade practices by Beijing.
Officials said talks are expected to deliver specific commitments on Trump's demand that China to expand market access for US in China, improve protection of intellectual property rights (IPR) and reduce the trade surplus with the US, but it would take time to reform state-owned firms another major source of friction.
Trump has set March 1 as the deadline for a deal. He has threatened to slap tariffs on all Chinese exports to US if the two sides fail to reach a deal.
Early this month, Elon Musk, the CEO of US electric carmaker Tesla, laid foundation to set up USD seven billion plant in Shanghai, becoming the first to benefit from a new policy allowing foreign carmakers to set up wholly-owned subsidiaries in China.
The new plant, Tesla's first outside the United States, is located in Lingang Area, a high-end manufacturing park in the southeast harbour of Shanghai. It is designed with an annual capacity of 500,000 electric cars.
China has softened its stand by offering a mix of concessions by resuming purchases of US soybeans, suspended punitive tariffs on imports of US cars and toned down its 'Made in China 2025' plan, which aimed at breaking the country's reliance on foreign technology and pull its hi-tech industries up to Western levels.