With the further development of the internal revolution and international investment liberalization, there exist a lot of disadvantages in the foreign investment law system currently. For example, there is severe conflict between the internal laws and regulations of foreign investment law system and other laws. Thus, the reconstruction of system is around the corner. In addition, the construction of free trade area (FTA) in Shanghai is already in the substantive stage, and bilateral investment treaty (BIT) between China and America is also in the stage of substantive talks. “Foreign Investment Law (Draft)” emerges as the times require under the domestic and international background. The publication of “Foreign Investment Law (Draft)” is a key breakthrough in the lawmaking improvement of domestic foreign law system, which is other new challenge that Chinese law system conforms to the world and meets the requirement of deepening the reform comprehensively put forward by the Third Plenary Session of the 18th Central Committee of the Communist Party of China.
The paper elaborates the important contents, such as foreign investors and investment, access management,national security review, information report, investment promotion, investment protection, complaint handling, supervision and inspection, especially the scientific discussion of variable interest entity (VIE) structure. “Foreign Investment Law (Draft)” will reform the foreign capitals management pattern, improve the foreign capitals management policy and transform the functions of the government. However, there are some questions in “Foreign Investment Law (Draft)”. Firstly, although it integrates partial contents of the three existing foreign investment laws – Sino-Foreign Equity Joint Venture Law (“EJV Law”), Sino- Foreign Cooperative Joint Venture Law (“CJV Law”) and Wholly Foreign-Owned Enterprises Law (“WFOE Law”), it doesn’t explain the relationship with other laws after the abolition of foreign funded enterprise law. Secondly, it has made some progress in the definitions of domestic and foreign investors and foreign investment, introduces the standard of “ Actual Control”, and includes “VIE” in the system of laws and regulations. Thirdly, it innovates foreign capitals management pattern and establishes foreign capitals management system including investment restrictions industry, anti-trust review and the security review, however, the partial contents of the security review system should be improved further.
In the end, the paper puts forward some questions on the suitability of comprehensive reporting system, nationalsecurity review system, investment restrictions and actual controller determination. Moreover, the paper analyzes the possible influence of foreign-funded real estate enterprise, current exchange control, existing foreign-invested enterprises, nationality change of Chinese entrepreneurs and the structure of VIE.