MOFCOM Further Delegates Foreign Investment Approval Authority


On March 12, 2009, the Ministry of Commerce of the PRC (“MOFCOM”) posted on its official website two circulars: the Notice of Ministry of Commerce on Further Enhancement of the Approval Scheme for Foreign Investment [Shang Zi Han No.7 (2009)](“Circular 7”), effective March 5, 2009, and the Notice of Ministry of Commerce on Delegation of the Approval Authority on Establishment of Foreign Invested Holding Companies [Shang Zi Han No.8 (2009)](“Circular 8”), effective March 6, 2009.

These two circulars, together with other recent circulars and the Foreign Investment Handbook[1] recently issued by MOFCOM, indicate a major shift in MOFCOM’s foreign investment approval policy, which has been in place for over 30 years. With this change, MOFCOM has effected a delegation of its approval authority over foreign investment to its local counterparts. The practical impact of the new policy is that, with the exception of certain large-scale and high-profile projects that will still require central level approval, foreign investment projects will now be approved at the local level. Given that, in practice, local governments in China tend to take a more wide-open, pro-investment stance than the central authorities, it is expected that this delegation of authority may result in quicker and more readily obtainable approvals for most foreign investment projects. We highlight below key aspects of the new policy regimen.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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