Deregulation of Wholly Foreign-owned Infrastructure Projects: Problems and Solutions

July 02, 2002 | BY

clpstaff &clp articles

Foreign-funded infrastructure projects form a critical part of China's economic development. However, ill-defined and incomplete legislation has over the years compromised the quality and boosted the costs as well as the final product prices of foreign-funded projects.

By Weidong WangGrandall Legal Group,Beijing and Jie TangCoudert Brothers,Beijing

Beginning about twenty years ago, the Chinese government began encouraging foreign investment in infrastructure projects due to the country's low level of infrastructure development and a lack of capital to undertake such projects. However, over time we have seen some wholly foreign-owned infrastructure projects that have had unexpected and unsatisfactory outcomes, both for the Chinese government and the foreign investors. The reasons for this are many. Some factors include differences in investment procedures depending on the location of the project, administrative issues regarding project construction, price formulation problems and the differing legal regimes in China and other jurisdictions. What is the current situation regarding foreign-funded infrastructure projects in China? And what problems regarding the legal regime and government administration of wholly foreign-owned infrastructure projects have we seen in our practice?