BEIJING, Aug. 30 (Xinhua) -- Foreign acquisitions of
Chinese companies will be subject to stringent new checks intended to protect
China's economic security under a new law passed on Thursday.
After 13 years on the drawing board, the Anti-Monopoly Law
passed by the Standing Committee of the National People's Congress (NPC),
China's top legislature, winning 150 out of the 153 votes, will come into effect
on Aug. 1, 2008.
"As well as anti-monopoly checks stipulated by this
law, foreign mergers with acquisitions of domestic companies or foreign capital
investing in domestic companies' operations in other forms should go through
national security checks according to relevant laws and regulations if the cases
are related to the issue," it reads.
Foreign companies have begun to acquire major
state-owned enterprises or companies with famous brands, arousing concerns about
China has already established a basic national
security check system for foreign mergers and acquisitions.
Foreign investors should apply for approval from the
Ministry of Commerce (MOC) if their purchases of domestic companies affect
national economic security, take place in key sectors or cause a transfer of the
operating rights of famous domestic brands, according to a regulation issued by
the MOC along with five other government organs last year.
Before that, only mergers and acquisitions worth more
than 100 million U.S. dollars needed MOC checks and approvals.
The government will strengthen examination and
supervision of foreign merger operations affecting major enterprises in
sensitive sectors and issue policies to improve the system for admitting
foreign-invested industries by the end of 2010, according to the National
Development and Reform Commission (NDRC).
In December last year, the State Council, China's
cabinet, released a list of strategic sectors in which the state would retain
The list included military-related manufacturing,
power production and grids, petroleum, gas and petrochemicals, telecom
manufacturing, coal, civil aviation and shipping.
Zhao Jinping, a researcher of the Development
Research Center of the State Council, said the implementation of the law would
have no effect on normal foreign investment and purchases.
He said the two documents issued by the MOC and NDRC,
aiming to restrict malicious foreign purchases, were not a signal for China to
limit foreign direct investment.
"A mature market protected by laws and regulations
will enhance the foreign investors' confidence in China's economic development
prospect," Zhao said.
Mei Xinyu, a researcher of the Chinese Academy of
International Trade and Economic Cooperation, said legislation on foreign merger
would affect foreign companies taking advantage of legal loopholes, but not
affect law-abiding companies.
New policies imposed on foreign companies failed to
curb foreign investment. The number of companies with total foreign investment
over 10 million U.S. dollars rose by 2,095 to 38,000 in June from the end of
The law, with eight chapters and 57 provisions, also
bans monopolistic arrangements, such as cartels and other forms of collusion,
and provides for the investigation and prosecution of monopolistic practices,
while protecting monopolistic arrangements that promote innovation and
It prohibits monopolies from using their dominant
status in themarket to curb competition, fix prices, enforce package sales,
andrefuse or enforce trade.
All companies seeking mergers or acquisitions would
have to notify the anti-monopoly law enforcement departments if the actions meet
the standard set by the State Council.
The law states that "an anti-monopoly commission will
be set upunder the State Council to deal with anti-monopoly issues." The
commission will appoint departments to undertake enforcement.
The law stipulates "officials of the law enforcement
departments will be prosecuted if they leak confidential trade information
acquired during investigation", to protect the interest of companies.
The law also stipulates that "government departments
should nottake advantage of their power to curb competition", and prohibits
governments from appointing producers or suppliers for unit or individual
The law bans trade associations from organizing
companies in their own industries to take monopolistic actions prohibited by
"Those who violate the provision will be fined up to
500,000 yuan (about 66,700 U.S. dollars), and the associations with serious
offences will be deprived of their registrations," the lawstipulates.
The provision was added during the third reading of
the anti-monopoly law. Late last month, the prices of instant noodles were hiked
by about 10 percent, which was coordinated by the instant noodles trade
Yan Jinhu, member of the NPC Standing Committee, said
the behavior caused panic in the society as many residents rushed to
supermarkets for purchase of instant noodles.
Other members also agreed to add the provision into
the law after having a heated discussion over the issue.
China joins more than 80 countries in adopting an
anti-monopolylaw.Drafting of the law began in 1994.
Experts said China's socialist market economy had
matured in the last decade, and the current market circumstances made the
introduction of an anti-monopoly law imperative.
China adopts emergency response law
BEIJING, Aug. 30 (Xinhua) -- China's top legislature on
Thursday adopted the emergency response law aiming at improving the country's
ability to handle frequent industrial accidents, natural disasters, health and
public security hazards.
With seven chapters and 70 clauses, the law will be
effective as of Nov. 1, 2007. Full story
China amends law to boost compulsory
vaccination of animals, pets
BEIJING, Aug. 30 (Xinhua) -- China's top legislature on
Thursday adopted the amendment to the law on animal epidemic prevention at the
ongoing session, which asks all animal owners to comply with compulsory
vaccination policies, especially owners of poultry and livestock bred in rural
backyards, and pets in urban houses.
The revised law, approved by lawmakers attending the
29th session of the Standing Committee of the National People's Congress (NPC),
which was to be effective on Jan. 1, 2008, was aimed at preventing future animal
epidemics and lower their social and economic impact. Full story
New law allows job seekers to litigate
BEIJING, Aug. 30 (Xinhua) -- Chinese employers could find
themselves in court from next year if they discriminate against job seekers on
the grounds of sex, age, religion, race or physical disability.
Job applicants will be entitled to sue employers for
discrimination from Jan. 1 under the new national Employment Promotion
Law. Full story