China's congress is set to pass a massive revamp of its Foreign Investment Law today, a revision that Chinese officials say will put foreign companies that invest in China on an equal footing with local firms.

Key points: The law aims to create a "stable, transparent and predictable market"

The law aims to create a "stable, transparent and predictable market" It will be illegal for officials to force foreign companies to share trade secrets

It will be illegal for officials to force foreign companies to share trade secrets "Discriminatory prohibitions" against Chinese investment could face payback

However some aspects of a draft version of the law — specifically an article about Beijing's right to take retaliatory measures against countries it believes are discriminating against Chinese companies — have been pointed to as a cause for concern.

The key reason is that it's unclear whether moves like Australia's decision to block telecommunications company Huawei from participating in its 5G network could be seen as discriminatory.

A spokesperson for Australia's Department of Foreign Affairs (DFAT) told the ABC it had sought additional information on this legal article from Chinese authorities.

Meanwhile, analysts suggest the reforms are also aimed at appeasing Western investors, as some of the new revisions will make it illegal for Beijing to force foreign companies to hand over intellectual property as a condition of doing business in China, a key gripe of the Trump administration.

Ahead of the law's passing, here's what's in the drafts and what analysts and the business community are saying about it.

What's in the new law?

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According to official state news agency Xinhua, the new Foreign Investment Law will create a "stable, transparent and predictable market environment for fair competition".

It aims to streamline the approvals process for potential investors, and will replace three existing laws, some of which date back to the 1970s.

The streamlined law will instil a system of "pre-establishment national treatment" that will essentially allow foreign investors to be treated the same as domestic Chinese companies when they seek to make an initial investment there.

However, foreign investors will be subject to what has been referred to as a "negative list" of 48 industry sectors — such as energy and education — which foreign companies will be restricted from participating in.

Likewise, there will also be a "security review system" for foreign investments that Beijing perceives to threaten national security.

Former Victorian premier John Brumby, now chairman of the Australia China Business Council, welcomed the draft law and told the ABC the new measures were similar to Australia and other Western countries' foreign investment vetting systems.

"There will be a 'negative list' — there's been some commentary about that — but really I see that as being no different to Australia's critical infrastructure evaluation," he said.

The "critical infrastructure evaluation" refers to Australian legislation that essentially protects key structural vulnerabilities — like natural gas pipelines or electricity grids — perceived to be vital to national security or economic health.

It is widely expected that delegates of the Congress, which is often viewed as a "rubber-stamp" Parliament, will vote in favour of the legislation today.

'Discriminatory measures': What are people worried about?

Australia blocked Chinese telco giant Huawei from investing in the country's 5G networks. ( AP: Andy Wong )

There is one section of the law, however, that's attracted more attention and concern around the world than the rest.

Article 37 of the draft legislation lays out China's right to take "corresponding measures" against countries or regions with "discriminatory prohibitions" against Chinese investments.

"If any country or region adopts discriminatory prohibitions, restrictions or other similar measures to the People's Republic of China [in terms of investment], China can take corresponding measures against that country or region according to the actual situation."

It has been suggested that this provision could be used against Australia over the decision to block Chinese telecommunications giant Huawei from participating in the 5G network rollout.

However Mr Brumby, who is also a former member of Huawei's Australian board, said the article may be consistent with Australia's pre-existing bilateral investment treaty with China.

"I think you'll need to have a look at how the final draft presents that," Mr Brumby said.

"There is, for example, already a Chinese-Australia bilateral investment agreement that was signed in 1988, and it makes reference, if my memory is correct, to non-discrimination."

The Australia-China Bilateral Investment Treaty (BIT) does make multiple references to non-discrimination, and requires that both parties do not impair investments through discriminatory measures.

However it makes no mention of "corresponding measures" that can be taken by wronged parties.

A DFAT spokesperson told the ABC it welcomed China's commitments to equal treatment in sectors open to investment, and said it had made a submission to Beijing regarding the draft law.

However the spokesperson said the department had "sought further information on some provisions in the draft", including Article 37 and the prohibition on forced technology transfer.

Greg Austin, the deputy director of UNSW Canberra Cyber, told the ABC that China has in the past responded to pressure against its high-tech industries by placing pressure on non-high-tech sectors — but this approach could be changing.

"The apparent Chinese go-slow on imports of Australian coal, in response to the Government policymaking around Huawei, is a good indicator of where they have been placing their main line of defence," Professor Austin said.

"I think the provisions in the new law around retaliation really leave open a little bit more policy room, or in the minds of Chinese policymakers, create the opportunity to directly retaliate in other sectors apart from the traditional."

What are the new intellectual property protections?

Under the law, it will be illegal to pressure foreign companies to give up their technology. ( Reuters: File )

Another section of the proposed legislation that's got tongues wagging deals with the issue of "forced transfer" of technology.

This part of the law is in reference to foreign companies currently being forced to give up their intellectual property as a condition of trading in China, an issue that has been central to the US-China trade dispute.

According to Article 22 of the new law, Chinese authorities must not "force the transfer of technology through administrative measures".

Professor Austin said while this was definitely an improvement for wholly-owned foreign enterprises, it was unclear how joint ventures would be affected.

"I'd say that many areas where tech transfer is happening are in the joint ventures, and it's in the joint ventures where some of the concerns were greatest," he said.

However Professor Austin said the move was a step in the right direction, and in line with China's previous commitments to strengthening protections on intellectual property.

"It has been the firm policy intention of the Chinese Government, beginning from the early-to-mid 1980s, to bring intellectual property theft in the country under control," he said.

"It's a bit sad I suppose that it's taken almost 20 years since China joined the [World Trade Organisation] for them to recognise, in law, that they need to outlaw the use of administrative measures to co-opt the intellectual property of wholly-owned foreign enterprises."

A win for Donald Trump's trade war? Maybe 'in principle'

It has been suggested the laws were fast-tracked to help resolve the US-China trade dispute. ( AP: Andrew Harnik )

Meanwhile, the Trump administration has been lashing China over forced technology transfers for more than a year now.

Back in August 2017, Mr Trump directed the US Trade Representative Robert Lighthizer to investigate Chinese Government trade policies, including allegations US companies were being pressured into giving up their intellectual property for market access.

The blistering report he delivered in March last year accused China of using joint venture partnerships, administrative processes and other foreign investment restrictions to steal technology.

Mr Lighthizer said this was especially prevalent in China's automotive and aviation industries, where innovative technology from Europe and the US was highly sought after.

However the response to the draft law from US sources has so far been fairly muted, with the American Chamber of Commerce in China welcoming the changes "in principle".

It has been suggested the law was fast-tracked, in part to address some of the Trump administration's concerns as well as China's slowing economic growth.

"China's situation is that it is still highly dependant on foreign technology," Professor Austin said.

"They need foreign investment desperately, they need foreign high technology desperately, and that's really in a sense driving the whole trade negotiations now between China and the United States.

"The outcome of this diplomacy by the United States will probably be profitable for everybody, and rather than seeing the trade pressure as an unmanageable threat to peace, I think in the long run it will prove to have been a foreign policy success for the Trump administration."

Mr Brumby said he hoped the changes would help solve the US-China trade dispute.

"I think in the context of the trade negotiations between China and the US, which have been extended and or stalled, that this would be a positive measure and may help to find a solution to that impasse," he said.

"And if it helps to find a solution, that will be good for China, it will be good for the US and it will be good for the world economy."