Types of business entities -
In general, foreign funds are not freely movable into China. There is a long history of exercising comprehensive control over foreign investment since China opened its door in the early 1980s. As the economy continues to grow, China has been gradually loosening the substantive and procedural requirements on foreign investments and carefully testing the water for national treatment for foreign investors in the past decade. On January 1, 2020, the Foreign Investment Law came into force, which marked a new height of the Chinese government’s supportive attitude towards foreign investment. It abolished the pre-approval scheme for foreign investments in existence for over forty years and officially effected a regime of “national treatment plus negative list” for foreign investment.
1. Foreign Investment Supervisory Scheme -
The so-called “national treatment plus negative list” scheme is designed to offer national treatment for most foreign investments; and foreign investors enjoy the same treatment as set forth for all other businesses with only domestic investors, except for those falling within a “negative list” as published from time to time by the relevant authorities. The currently effective “negative list” refers to the Special Administrative Measures (Negative List) for Foreign Investment Admission (2020 Edition), promulgated jointly by the National Development and Reform Commission and the Ministry of Commerce of the PRC.
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