We expect to see a number of important legal developments in 2007. These include:

  • Anti-Monopoly Law

The draft Anti-Monopoly Law aims to prohibit monopolistic agreements and the abuse of dominant market positions, safeguard competition, protect consumer rights and the public interest, and prohibit the abuse of administrative power. The current thresholds and review procedures for anti-trust filings will be replaced. The main recent issue in the draft law has been which governmental authority, MOFCOM, the State Administration of Industry and Commerce, the National Development and Reform Commission or a new authority, will be in charge of the new regime.

  • Labour Law

The labour law is being revised to provide greater protections for employees in China. Drafts of the law indicate that it may become more difficult to terminate an employment relationship, and that more compensation may be payable upon termination. Labour unions may also be given more powers. Some multinationals have suggested that they may invest elsewhere if China adopts the new Labour Law.

  • Unified tax regime

China plans to introduce a unified tax regime to tax domestic companies and FIEs equally. Current FIE incentives are expected to be phased out over a five-year period. FIEs set up before the commencement of the phasing-out period may still benefit from current tax incentives. The Ministry of Finance has set unification of the tax regime as a priority for 2007.

  • Environmental laws

China's 11th five-year plan emphasises China's growing commitment to environmental protection. This commitment is also demonstrated by the Renewable Energy Law, which was effective 1 January 2006. The commitment is also expected to be addressed in the forthcoming Energy Law. Moreover, the State Environmental Protection Agency is expected to begin approving (or rejecting) projects on specific environmental grounds. Foreign investment in energy-saving and environmentally friendly industries should receive greater priority during 2007.

  • Foreign Investment Industrial Guidance Catalogue

The National Development and Reform Commission has indicated that the Foreign Investment Industrial Guidance Catalogue will be revised in 2007 to reflect China's changing policies on foreign investment (see above).