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China Foreign Investment Policy System

Updated:2018-2-28 17:51:43    Source:www.tannet-group.comViews:1282

Foreign investment in China is, at once, an issue of great age and great youth. Against the historical backdrop of Western exploitation during the second half of the nineteenth and first half of the twentieth centuries, and policies alternating between shutting out or accepting foreign investment, China’s leaders have now determined that the “awakening Giant” can withstand and prosper with the help of foreign investment while relying on China’s own efforts.

In order to create a favorable investment environment and to encourage overseas firms to invest in China, since the year of 1979 the Chinese government has gradually set up a relatively complete legal system, and constituted a foreign investment policy system, which mainly includes industrial policies, regional policies, tax policies and financial polices.

Main laws and regulations for foreign investments in China
(1) The law of P.R.C. on Chinese-Foreign Equity Joint Ventures and its implementation regulations;
(2) The law of P.R.C. on Chinese-Foreign Contractual Joint Ventures and its implementation regulations;
(3) The law of P.R.C. on Wholly Foreign-Owned Enterprise and its implementation regulations;
(4) The law of P.R.C. on Foreign-invested enterprises, the income tax and its implementation regulations;
(5) Provisions on Guiding Foreign Investment Direction; Industrial Catalogue for Foreign (6) Investment; Catalogue of Advantageous Sectors for Foreign Investment in Central and Western Regions;
(7) The law of P.R.C on the Protection Taiwan Compatriots' Investment.
Note: the related laws and regulations also apply to the investments from Hong Kong, Macao and Taiwan in China mainland.

Forms of Foreign Investment in China
Foreign investment involves capital flows from one country to another, granting extensive ownership stakes in domestic companies and assets. Foreign investment denotes that foreigners have an active role in management as a part of their investment. A modern trend leans toward globalization, where multinational firms have investments in a variety of countries.

Chinese-Foreign Equity Joint Ventures, China-Foreign Contractual Joint Ventures, Wholly Foreign-Owned Enterprise is the three main forms of Foreign Direct Investment in China for absorbing foreign capital. Other investment forms include Share Company with Foreign Investment, Foreign Invested Holding Company, Joint Exploitation, BOT, etc.

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