China is planning to approve new rules for foreign investment in the country this week, a sweeping overhaul of regulations that will affect corporate titans from Ford to Alibaba and Tencent.

The regulations are slated for passage Friday by the National People's Congress during a once-a-year gathering of legislators to seal the country's most important policies. Key pillars of the new law will remove a major threat to investors in China's massive technology sector, while putting thousands of overseas companies on notice that they may need to renegotiate joint ventures (JVs) in China.

In the latest draft, Beijing dropped language that would have invalidated the so-called “variable-interest entity” (VIE) structures employed by Chinese tech giants from Alibaba Group Holding Ltd. to Tencent Holdings Ltd. But it's also proposing to scrap special laws governing Sino-foreign tie-ups—a move that could force them to re-examine longstanding contracts, lawyers say.