Document Type

Article

Disciplines

International Law

Abstract

Since China1 re-entered the global business community in 19782, western corporations have demonstrated a widespread interest in doing business with the world's most populous country.' The prospect of entering the vast market of China is no longer just a dream. The foreign investment climate in China is changing rapidly,4 as is evidenced by the almost two hundred laws and regulations concerning foreign investment which were introduced in the interim between 1979 and 1986.' The Chinese Government is eager to utilize the capital and technology of foreign multinational corporations and to earn foreign currency through the expansion of its international trade.6 In an effort to further encourage foreign investors, the Chinese government now allows direct, foreign participation in the management and profits of companies operating in China.

In an effort to evaluate the problems and to understand the concerns and perspectives of both China and the foreign investment community, this paper examines the practices China has used in the past decade to attract foreign investment. The focus of this paper is on the legal framework in which foreign enterprises have developed - the equity joint venture, the contractual joint venture and the foreign whollyowned subsidiary. Problems related to the percentage of investment, management, profit sharing, taxation and arbitration are discussed in detail. Other problems, such as employment law differences and the shortage of foreign currency, are discussed in relation to the recent development of Chinese foreign investment legislation.

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