China resolves to stop illegal withdrawal of foreign investors

February 09, 2009 | BY

clpstaff &clp articles

Four central ministries jointly issue guidelines to protect domestic parties

Many foreign investors in the PRC have started to withdraw their investments in China – some have even fled or abandoned their assets. The government has issued guidelines to protect domestic parties when situations such as these come up.

The lengthily-titled Working Guidelines on Cross-border Pursuit of Liability and Initiation of Legal Action by Relevant Interested Parties in Connection with Abnormal Withdrawal from China of Foreign Investors were issued by four ministries and restate what Chinese parties and institutions can do in the event of abnormal withdrawal of foreign funds from China.

Li Haifeng, partner of Global Law Office, says that the Working Guidelines remind people of the availability of such means, while discouraging foreign investors who are considering the option of abnormal withdrawal.

“Our experience is that the Chinese government can be highly effective in certain sensitive issues,” adds Guangda Law Firm partner Kent Woo. “As such, we imagine that the warning may work somehow.”

But Woo is not optimistic about how the Working Guidelines may effectively help unpaid workers get compensation. “The costs of time and money involved in tracking the defendants or criminals on the international level could be high enough to discourage small claimants,” he says.

Affected parties include local authorities, creditors, and employees of foreign-invested enterprises. The anguish of unpaid workers has been shown by their protests, which Woo says send negative messages internationally and affect social stability.

For more on this story, see page 20.

This premium content is reserved for
China Law & Practice Subscribers.

  • A database of over 3,000 essential documents including key PRC legislation translated into English
  • A choice of newsletters to alert you to changes affecting your business including sector specific updates
  • Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
For enterprise-wide or corporate enquiries, please contact our experienced Sales Professionals at +44 (0)203 868 7546 or [email protected]