Development Of China's Pre-Establishment National Treatment

When the foreign investments wish to enter host country,national treatment can be given during the pre-establishment period and negative list are used to regulate areas that are not open to foreign investment.Another way for foreign investments to enter host country is that their investment is within the positive list which clearly regulates areas open to foreign investment.Nowadays,under the international investment liberalization trend,giving pre-establishment national treatment is regarded as a mode that has high openness.China has long used the post-establishment national treatment and used the Catalogue for the Guidance of Foreign Investment Industries to regulate different areas.This kind of measure,for a long time,by reducing restricted and forbidden industry areas and expanding encouraging areas,has achieved the liberalization goal.At the same time,super national treatment like tax benefit was given to foreign investor and investment by relating law.Even though these kind measures can to some extend open investment areas and attract foreign investment,these measures are not the best way to achieve the goal.Because first,even though we can reduce the number of restricted and forbidden areas,the list is positive list and positive list has its own limit.Second,using administrative power to give foreigners super national treatment can cause unfair competing environment and distort the normal operation.However,under the influence of international investment liberalization trend and for the purpose to achieve bilateral investment treaties with U.S.and European Union,China has gradually change its mode in the foreign investment access period.The draft of The People's Republic of China Foreign Investment Law and the revision of the three related foreign investment law shows the transformation of china's foreign investment access mode.The establishment of Shanghai Pilot Free Trade Zone and the new negative list shows China's wish and action to change its mode.Even though there are huge progress comparing the new negative list with the Catalogue for the Guidance of Foreign Investment Industries.But if we analyze the negative list carefully we can see there are still many problems.The negative list we use now lack flexible measures and many investments related duties are not included in the list.Also government administrative behavior should always be analyzed whether it consistent with proportionality principleo This is a way to see the implementation of pre-establishment national treatment.Beside the openness,another factor that need to pay attention is the control of risk during post-establishment period.Exceptional measures,as safety valve,balance the openness during pre-establishment period and risk caused by it.Take financial prudential measures as an example to see all the Free Trade Agreements we signed now,we can see China has notice the need to set exceptional measures,But in all,these measures are very general and need to further development.In a word,China is changing its mode to pre-establishment national treatment.But there are many inconsistences between law and practice.However,this loose pre-establishment period and tight regulation mode is the choice of China to achieve its goal of investment liberalization.