In order to create a congenial investment environment and to
encourage overseas firms to invest in China, China has gradually set up a
relatively complete legal system. In 1979 the National People's Congress issued
The Law of the People's Republic of China on Chinese-Foreign Equity Joint
Ventures. In the following 20-odd years, the Chinese government has promulgated
and issued a series of laws and statutes concerning the establishment,
operation, termination and liquidation of foreign-invested enterprises. The main
laws and regulations include the three basic laws ― The Law of the People's
Republic of China on Chinese-Foreign Equity Joint Ventures, The Law of the
People's Republic of China on Chinese-Foreign Contractual Joint Ventures, and
The Law of the People's Republic of China on Wholly Foreign-Owned Enterprises;
detailed rules for the implementation of the three basic laws; The Company Law
of the People's Republic of China; The Income Tax Law of the People's Republic
of China for Enterprises with Foreign Investment and Foreign Enterprises;
Interim Provisions for Guiding Foreign Investment; Industrial Catalogue for
Foreign Investment; Interim Provisions Concerning the Investment within China of
Foreign-invested Enterprises, Provisions Regarding the Merger and Separation of
Foreign-invested Enterprises, and Liquidation Measures for Enterprises with
Foreign Investment. These provide legal bases from which to guarantee the
independent operation rights of foreign-funded enterprises and to protect the
legitimate rights and interest of both domestic and overseas investors.
Currently, the Chinese government is reexamining its existing laws and
statutes in accordance with the framework of the WTO. It has abolished certain
obsolete laws and regulations, and will gradually revise the laws and
regulations that are incompatible with the rules of the WTO. For instance, in
2000 China revised The Law of the People's Republic of China on Chinese-Foreign
Contractual Joint Ventures and The Law of the People's Republic of China on
Wholly Foreign-Owned Enterprises, and discarded certain restrictions regarding
the balance of foreign exchange account and localization of supplies. In 2001
The Law of the People's Republic of China on Chinese-Foreign Equity Joint
Ventures was also revised.
