The Identification And Analysis Of Investment In Foreign Investment Law

The National People's Congress passed the Foreign Investment Law of P.R.C.in March 2019,which will come into effect on January 1st,2020.The promulgation of Foreign Investment Law proclaims the end of the era of "the three laws on foreign investment".It highlights the goal and determination of China to further deepen reform and opening up,attract foreign investment and provide effective protection for foreign investment.In terms of the definition of foreign investment,the law uses an intuitive definition model and it divides investment into four types: establishment of enterprises,acquisition of equity,investment in new projects,and other investment prescribed by laws,administrative regulations or specified by the State Council.The definition method used by Foreign Investment Law is different from the one that is commonly used around the world in the area of foreign investment.The most popular definition model is open and asset-based.The definition used by Foreign Investment Law also differs from the ones in "the three laws on foreign investment" and bilateral investment treaties.On the other hand,the definition of investment in Foreign Investment Law is general and macroscopic.It does not provide specific answers to many controversial issues,which will easily lead to conflicts in international investment practice.Therefore,the analysis of the definition of foreign investment is necessary.China should learn from international conventions,bilateral investment treaties and the awards of international investment disputes to modify and improve the definition of investment in our domestic legislation and international legislation of foreign investment.In addition to the introduction and conclusion parts,this article mainly includes the following three major contents:The first chapter briefly introduces the legislative background of Foreign Investment Law and the changes and development trends of the definition of investment in the foreign investment legal system of China.Then it analyzes the operational effects of the definition of investment under different laws and regulations.Subsequently,this chapter focuses on the definition of investment in Foreign Investment Law and compares it with the ones in bilateral investment treaties and national laws of other countries.Then it concludes that there are certain problems of the definition of investment,including the identification of indirect investment and reinvestment,the legality of VIE(Variable Interest Entities)and so on.The second chapter mainly analyzes the positioning and development trend of foreign investment definition in international legislation and arbitration practice.This chapter first introduces several major investment definition models.Then it analyzes the characteristics and differences of the definition of investment from the perspectives of international investment conventions,bilateral investment treaties and national laws of other countries.Finally,it analyzes the latest international investment arbitral awards and finds the specific criteria and elements of investment definition.The third chapter points out the problems existing in the investment definition of foreign investment legal system of China.It puts forward reasonable suggestions for the coordination of Chinese domestic legislation and international legislation in terms of investment.First of all,Foreign Investment Law should include the types of investment generally recognized in the bilateral investment treaties signed by China.Thus there will be consistency and coherence of the definition of investment in Foreign Investment Law and bilateral investment treaties.Secondly,China should centrally sort out the laws and regulations of foreign investment and amend those backward definitions of investment.Some of the laws and regulations are too obsolete and they may have no need for applicable.These laws and regulations should be abolished.Finally,China should draft implementation rules of Foreign Investment Law as soon as possible.The implementation rules should provide specific provisions on the criteria for the identification of indirect investment and reinvestment,the legality of the VIE,etc.Meanwhile,it can also use “investment characteristics elements” to limit the investment definition reasonably.