Document Type
Article
Disciplines
International Law
Abstract
Conventional wisdom and empirical research indicate that a vibrant private equity market cannot be created and sustained in the absence of a deep and liquid stock market and a functioning legal system. In a comparative law sense, China has a bank-centered capital market and weak legal system (i.e., corporate governance, investor right protection, law enforcement and judiciary) which are theoretically incapable of nurturing and supporting strong private equity activities. Nevertheless, surprisingly, the private equity circle widely treats China as the most attractive destination for investment. Private equity investment into China ranks as the second worldwide, right after the United States. This article uses Chinese corporate law and some well-established company law theories to pierce the veil of the "China myth." The key to understanding this "China myth" is the marketoriented locked-in commercial norm, inter alia, the "opt-out" approach or "roundtrip investment" model, which private equity investors have adopted. In making proposals to solve legal issues related to the "China-myth" the tension between the private equity circle and China's regulatory bodies is also discussed in the larger picture of regulatory response, transplant, competition and convergence.
Recommended Citation
Shen, Wei, "Face Off: Is China a Preferred Regime for International Private Equity Investments? Decoding a "China Myth" from the Chinese Company Law Perspective" (2010). Connecticut Journal of International Law. 504.
https://digitalcommons.lib.uconn.edu/cjil/504
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