Market access for foreign investors in China 2016. Investigating the Draft Foreign Investment Law

Table of Contents

1. Introduction

1.1 Research question

1.2 Methodology

1.3 Structure

2. The foreign investment framework of China

2.1 Existing issues identified in relation to market access and transparency

2.1.1 Pre-approval system

2.1.2 Protection against expropriatory measures

2.1.3 Variable interest entities

3. Analysis of the Draft Foreign Investment Law of China

3.1 Changes proposed by the draft foreign investment of china

3.1.1 The pre-approval system

3.1.2 Protection against expropriatory measures

3.1.3 Variable interest entities

4. Analysis on whether the changes address the existing legal issues

4.1 The pre-approval system

4.2 Protection against expropriatory measures

4.3 Variable interest entities

5. Conclusion

Research Objectives and Key Topics

The primary research objective of this thesis is to evaluate whether the proposed changes in the Draft Foreign Investment Law (DFIL) of China effectively resolve identified legal challenges within the existing market access framework, specifically regarding the pre-approval system, expropriation protection, and the regulation of variable interest entities.

• The pre-approval system for foreign direct investment (FDI).
• Protection mechanisms against nationalization and expropriatory measures.
• The legal status and regulation of variable interest entities (VIEs).
• Transparency and administrative recourse for foreign investors.
• The impact of transitioning from existing fragmented legislation to a unified legal framework under the DFIL.

Excerpt from the Book

Summary of Chapters

1. Introduction: Outlines the significance of foreign direct investment in China and introduces the research question regarding the effectiveness of the Draft Foreign Investment Law.

2. The foreign investment framework of China: Describes the current fragmented legal structure and identifies specific legal issues concerning market access and transparency.

3. Analysis of the Draft Foreign Investment Law of China: Examines the proposed legislative changes introduced by the Ministry of Commerce to modernize China's investment environment.

4. Analysis on whether the changes address the existing legal issues: Evaluates the proposed DFIL provisions against the identified problems in pre-approval, expropriation protection, and VIE structures.

5. Conclusion: Summarizes the findings, concluding that while the DFIL addresses most identified issues, some remain only partially resolved.

Keywords

Foreign direct investment, FDI, China, Draft Foreign Investment Law, DFIL, market access, pre-approval system, negative list, variable interest entities, VIEs, expropriation, nationalization, transparency, investment protection, regulatory framework.

Frequently Asked Questions

What is the core focus of this research paper?

The paper focuses on analyzing the current foreign investment laws in China and evaluating whether the newly proposed Draft Foreign Investment Law (DFIL) adequately addresses major legal bottlenecks regarding market access and regulatory transparency.

What are the central thematic areas covered?

The study centers on three main areas: the pre-approval system for foreign projects, legal protections against expropriation, and the regulation of variable interest entities (VIEs).

What is the primary research question?

The research question asks: "Market access for foreign investors in China: Are the three identified legal issues pertaining to the current framework addressed through the proposed changes of the Draft Foreign Investment Law?"

Which scientific methodology does the author apply?

The author utilizes a doctrinal research methodology, focusing on the analysis of primary and secondary sources, including national legislation, international law, and expert academic commentary.

What does the main body of the work address?

The main body examines the existing legal framework of China, analyzes the content and intent of the DFIL, and compares the proposed changes against the current legal difficulties faced by foreign investors.

Which keywords best characterize this work?

Key terms include FDI, DFIL, market access, negative list, VIE structures, expropriation, and legal transparency in the Chinese investment climate.

How does the DFIL change the current "pre-approval" system?

The DFIL intends to replace the current case-by-case pre-approval process with a "negative list" approach, aiming to simplify procedures for "permitted" and "encouraged" industries and increase regulatory transparency.

What is the current legal status of "Variable Interest Entities" (VIEs)?

Currently, VIEs operate in a legal gray area or "loophole" without formal recognition under Chinese investment laws. The DFIL aims to bring these structures under formal regulation by redefining foreign investment to include offshore control of Chinese companies.