China’s congress was ready to overhaul its Foreign Investment Law on Friday as it continues its efforts to open up its markets and level the playing field for foreign investors. The issue has been central to China’s long running trade sparring with the United States and it is now set to have an impact on business in Australia.

While the new law promises to deliver a more “stable, transparent and predictable market” for all, experts have raised concerns about one certain aspect of the draft legislation relating to discrimination and retaliatory measures. The law states that Beijing would be able to take action if it believes other countries are taking a hard line against Chinese enterprises without due reason.

The ongoing tensions surrounding telecoms giant Huawei has dominated headlines in 2019. Australia recently decided not to use Huawei’s tech in new next-generation 5G networks due to concerns about national security. The United States has also closed the door on Huawei’s equipment and New Zealand, UK and Canada appear likely to do so in the coming months.

However, the moves made by the Five Eyes alliance may now be seen as discriminatory under the new laws set to be introduced in China. A spokesperson for the Department of Foreign Affairs (DFAT) noted last Friday that it was trying to find out further details about the specific article from Chinese authorities.

Analysts believe the reforms in China should be positive overall as they are designed to make markets on the mainland a more attractive prospect for investors in the west. Security has been a hot topic in recent months and the new revisions are believed to include a new article that would prevent Beijing from forcing foreign enterprises to part with intellectual property prior to conducting business in China.

US President Donald Trump has bemoaned that particular issue on several occasions since the onset of its tit-for-tat trade conflict with China. Official state news agency Xinhua said the updated Foreign Investment Law will create a market environment capable of supporting fair competition at all times. It aims to cut down on the current laborious nature of approvals and replace certain laws that have been in place for almost 50 years.

The new law will essentially put foreign companies on the same footing as local businesses when they begin the process of investing in China. However, some sectors will continue to be off limits. These will be enshrined in a “negative list”, with energy and education among the 48 that will not be open to foreigners for investment. A new “security review system” will also vet outsiders to ensure they do not pose a threat to national security.

Former Victorian premier John Brumby said the new foreign investment law was a welcome change and that it has been driven in part by its trade standoff with the US. He 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.”

Mr Brumby added: “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.’

He also said that if the solution is beneficial for both China and the US, it will also be positive for the world economy, while paving the way for a definitive resolution to the trade war which has rattled stock markets and economies across the globe during the last eight months.