Regulation of foreign investment in Chinese law

Prior to 1979, the legal system of the People's Republic of China (PRC) did not provide any mechanism for foreign direct investment (FDI). China's decision to accept FDI came with the arrival of a new political leadership set upon the pursuit of radically different economic policies following the Cultural Revolution. The new leadership sought to take China on the quickest route to modernization while still remaining loyal to the socialist state. Therefore, while the Chinese Constitution insists on public ownership as the basis of the economy, it also recognizes and encourages other forms of economic activity which benefit the national economy. This reform process led to an enlarged private sector and considerable FDI. That process continues today as the Chinese legal system moves further towards the promotion and protection of foreign investment and international norms of economic behaviour.This thesis examines the development of China's legal regime regarding foreign investment. It will highlight distinctive features of that regime such as the enactment of laws by both national and regional governments.The thesis will also examine how the opening to FDI has resulted in increased interest in international law by the Chinese government. With considerable speed, China has recognized and adhered to international treaties regarding foreign investment since the end of the Cultural Revolution.Finally, this thesis will analyze the many difficulties surrounding FDI in China today. Managing foreign investment in a centrally planned economy has led to many legal, political, social, and economic problems. The focus of this analysis will be on legal difficulties concerning FDI which are of particular concern to foreign investors