Foreign Investment Law Chapter 3

Foreign Investment Law of the People’s Republic of China

Chapter III Investment Protection

Article 20

The State does not expropriate foreign investment.

Under extraordinary circumstances, the State may expropriate and requisition the investment of foreign investors in accordance with the law and for the needs of the public interest. The expropriation and requisition shall be conducted in accordance with legal procedures and timely and reasonable compensation shall be given.

Article 21

Foreign investors’ capital contribution, profits, capital gains, assets disposal income, intellectual property license fees, legally obtained damages or compensation, liquidation proceeds, etc., may be freely remitted to overseas in RMB or foreign exchange according to law.

Article 22

The State protects the intellectual property rights of foreign investors and foreign-invested enterprises, protects the legitimate rights and interests of intellectual property rights holders and related rights holders, and holds intellectual property rights infringers legally accountable in strict accordance with the law.

The State encourages technical cooperation based on the voluntariness principle and commercial rules in the process of foreign investment. The conditions for technical cooperation are determined by equal negotiation between the parties to the investment inaccordance with the principle of fairness. Administrative agencies and their staff are prohibited to use administrative means to force any technology transfer.

Article 23

The administrative organs and their staff shall keep confidential the business secrets known to them, of foreign investors and foreign-invested enterprises during the performance of their duties, and shall not disclose or illegally provide them to others.

Article 24

The people’s governments at all levels and their relevant departments shall be in compliance with the provisions of laws and regulations in formulating normative documents concerning foreign investment; unless authorized by laws and administrative regulations, they shall not derogate from the legitimate rights and interests of foreign-invested enterprises or increase their obligations, set forth conditions for market access and exit, and interfere with normal production and operation of foreign-invested enterprises.

Article 25

Local people’s governments at all levels and their relevant departments shall honor their commitments on policies made available to foreign investors and foreign-invested enterprises under the law and various types of contracts concluded in accordance with the law.

If policy commitments or contractual agreements need to be changed for the State interests and public interests, they shall be conducted in accordance with the statutory authority and procedures, and foreign investors and foreign-invested enterprises shall be compensated for the losses they suffered accordingly.

Article 26

The State establishes a complaint and settlement mechanism for foreign-invested enterprises, with a view to promptly handling problems raised by foreign-invested enterprises or their investors, and coordinating and improving relevant policies and measures.

If a foreign-invested enterprise or its investors believe that the administrative actions of the administrative organ and its staff infringe upon their legitimate rights and interests, in addition to applying for a coordinated solution through the complaint and settlement mechanism for the foreign-invested enterprise in accordance with the provisions of the preceding paragraph, they may also apply for administrative reconsideration and file an administrative lawsuit according to law.

Article 27

Foreign-invested enterprises may establish and voluntarily participate in chambers of commerce and associations according to law. The chamber of commerce and association shall carry out relevant activities in accordance with the laws, regulations and its articles of association to safeguard the legitimate rights and interests of its members.