Chinas Foreign Investment Approval Regime

Chinas Foreign Investment Approval Regime

According to the Interim Measures for the Administration of Examining and Approving Foreign Investment Projects, issued in October 2004 and still in effect, all proposed foreign investments in China must be submitted for approval to the National Development and Reform Commission (NDRC) or to provincial or local Development and Reform Commissions, depending on chinese language school the sector and value of the investment. NDRC's approval process includes assessing the project's compliance with China's laws and regulations, its national security implications, and its economic development ramifications. In some cases, NDRC also solicits the opinions of relevant Chinese industrial regulators and "consulting agencies," which may include industry associations that represent domestic firms. The State Council may also weigh in for high-value projects in "restricted" sectors.

Mergers and Acquisitions and the Anti-Monopoly Law

MOFCOM (or, depending on the sector and value of the investment, the provincial or local Department of Commerce) reviews all proposed mergers and acquisitions (M&A) by foreign investors. The Anti-Monopoly Law (AML) allows antitrust regulators to make decisions based on factors other than consumer welfare. The AML states that China will protect the "lawful activities" of state-regulated monopolies and chinese lessons shanghai does not clearly resolve whether state-owned enterprises (SOEs) are otherwise subject to the law's competitive provisions. The law states that China will set up a national security review process for proposed foreign M&A of Chinese firms, which China expects to establish in 2011.

The Regulations Concerning Foreign Investors Acquiring Domestic Enterprises instruct regulators to consider an M&A's potential impact on "national economic security" when evaluating a transaction. Foreign M&A transactions that result in "actual control" of a domestic enterprise in a "key industry" or of a "famous trademark" or Chinese "time-honored brand" are examined more closely.

Problems with China's Foreign Investment Approval Regime and the Anti-Monopoly Law

All proposed foreign investments in China are evaluated on a case-by-case basis, allowing significant discretion on the part of Chinese regulators to impose unexplained restrictions on new investment projects and to take into account the interests of chinese program domestic competitors. This ad hoc system diminishes the transparency of China's investment regulations and adds to investor uncertainty.

AML implementation also suffers from a lack of decision-making transparency. MOFCOM decisions to block or conditionally clear proposed M&A transactions are the only administrative decisions required to be publicized, so the majority of MOFCOM reviews have left no public record. MOFCOM's published decisions are brief and offer little substantive analysis. China's courts have been reluctant to take AML cases involving China's largest SOEs.

by: Mandarin Morning

POST COMMENT

Essential Details In China Trading Revealed Fashionable Mens Clothing China Shop Introduction Of Crusher That Created In China Sand Maker Is Widely Used In Western China When Will China Dominant The High End Market Of Silicon Powder Luxury China: Market Poised To Explode Buy Nfc Rfid Reader For Nfc System From China Rfid Study In China: How Long To Be Fluent? Desktop Usb Nfc Reader & Writer From China Rfid Giving Life To Orphans Through China Adoptions Buy Rfid Wristband For Access Control From China Rfid Male Grooming Market Fuelling Future Growth In China Classy Bone China Crockery