(game music)
- [Ksenia] China has never been an easy game
for foreign businesses to play.
Companies have complained about a tightly controlled market
and what they regard as protectionist regulations.
There have also been complaints about inadequate protection
of intellectual property, or IP
as well as forced transfers of know-how.
- China, which is a first world country now,
has to play by the rules.
We can't allow them to steal our technology.
- [Ksenia] Though Beijing denies
it forces companies to divulge secrets,
this has been one of the sticking points
during trade negotiations.
But recently--
(Xi speaks Chinese)
With hopes for a partial deal on the horizon,
Beijing has been playing nice,
emphasizing its message that it's working hard
to improve its business environment.
This is something foreign companies operating in China
have been eager to see,
but is this really going to change the game?
Starting next year, China pledges to put overseas companies
on more equal footing with local players
with a new set of regulations.
In January, a new law governing foreign investment kicks in.
It promises to do more
to protect overseas companies' technology and know-how.
- Foreign investment,
well, it does have a positive impact on US companies.
- [Ksenia] Jake Parker is a Senior Vice President
of the US-China Business Council,
a lobby group of some 200 American companies
that do business in China.
In October, the Council received a draft of the guidelines
on how the law will actually work.
In general, they liked what they saw.
Chinese officials will be banned
from forcing technology transfers.
The guidelines will also limit
the disclosure of trade secrets
from going through China's administrative review process.
- However, at least on IP, the draft does fall short
on specifying the types of disclosures
of trade secrets that will be prohibited
and clarifying the types of administrative groups
within China's government
to which provisions of technology transfer apply.
- [Ksenia] At the same time,
China is also rolling out regulations
that will open up its financial sector.
- The banks and all of the financial services companies
will be very, very happy with what we've been able to get.
- [Ksenia] Starting next year,
foreigners should be able to freely invest
in future securities and life insurance.
- The trick is to wait and see
if these implementations and liberalizations
lead to specific licenses for member companies
and there's always a disconnect
between an opening of a sector
and a company being able to operate there.
- [Ksenia] These steps won't only level the playing field
for foreign and domestic companies
but could also end up helping China achieve
its own development goals.
Beijing wants to hit a target of doubling its GDP
between 2010 and 2020.
That will not be an easy task with economic growth cooling
and a trade war stretching deep into a second year.
- Foreign investment remains an important mix
in China's economic system
and they would like to ensure that foreign companies
continue to invest there.
- [Ksenia] While the new investment law is welcome,
analysts say these new business regulations
don't mean a shift away from China's direct investment
in its domestic companies
or looser control of its planned economic goals.
In late October, China set up a state backed fund
for its semi-conductor industry.
The war chest is around $29 billion.
That's about $9 billion bigger than a similar fund
that was raised in 2014.
That's part of an attempt by Beijing
to make its key industries more self sufficient
and competitive in the long run.
(Xi speaks Chinese)
China's new regulations promise a sweeping overhaul
of its older practices,
and this could affect corporate titans
as well as smaller businesses.
- China is going to focus on the economic reform priorities
that make sense for their own domestic economy
and in many ways, those align with some of priorities
of the foreign business community.
- [Ksenia] However, some companies are waiting to see
just how sincere Beijing is about opening up.
At least for now, the opening up is win-win for Beijing.
It extends a political olive branch to the US
during contentious trade talks,
while potentially bringing foreign money
and expertise into its economy.
(upbeat music)