Foreign Capital and SOEs: China's Forays into State Enterprise Reform
November 30, 2002 | BY
clpstaff &clp articlesReforming China's state-owned enterprises is crucial to any economic reform efforts. A preliminary step has been made to introduce foreign investment into the public sector, and comes amid a more broadly based legislative effort to revamp China's economy.
By Jean-Marc Deschandol Partner, & Wang Tong, Associate, Norton Rose, Beijing
On November 8 2002 the government introduced the Use of Foreign Investment to Restructure State-owned Enterprises Tentative Procedures (the Tentative Procedures), and they take effect January 1 2003. The Tentative Procedures are the latest milestone in a series of reforms announced this year to boost foreign investment in China's ailing state sector. At the same time, the Tentative Procedures help to clarify the regulatory framework for the conversion of purely domestic companies into foreign-invested enterprises (FIEs).
Under the Tentative Procedures, except for those areas where foreign investment is prohibited for overriding reasons such as state security or national interest, foreign investors are allowed to restructure state-owned enterprises and unlisted companies with state shareholdings (together, SOEs) in most industries by way of equity or asset transfers.
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