The New Foreign Investment Guidelines and Market Reform in China
March 31, 2002 | BY
clpstaff &clp articlesThe State Council promulgated the Guiding the Direction of Foreign Investment Provisions (the 2002 Provisions), which are effective as of April 1 2002. A closer look at these important regulations, the momentum for market liberalization in China and further legal changes governing a range of industries can be expected.
By Randall Peerenboom,
Yiwen Law Firm,
Beijing
Rationale and Prior Regulatory Framework
The PRC has long sought to direct investment according to national goals. The basic policy has been to steer foreign investors toward high-tech manufacturing projects in certain favoured sectors and infrastructure projects. The goal was to introduce new technology that could be used to upgrade China's own industries, create employment and improve China's foreign exchange balance by encouraging companies to produce import substitutes, purchase raw materials and equipment locally, and export as much of their product as possible. At the same time, the government has attempted to protect infant or weak industries and non-industrial sectors by prohibiting or limiting investment.
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