China's WTO Updates
Law Ensures Fair Play for Joint Venture Firms

Sino-foreign joint ventures now have new legal protections to ensure fair treatment in accordance with China's commitments to the World Trade Organization (WTO).

The State Council issued a decree amending the implementation and regulation of the Chinese and Foreign Equity Joint Ventures Law to improve the environment for foreign investment.

According to the amendment, Sino-foreign joint ventures will be treated the same as domestic enterprises in terms of raw and processed material purchasing and product sales.

In a further relaxation, the procedures to establish Sino-foreign joint ventures have been simplified, lessening administrative interferences.

Experts hail the new regulation as bringing China closer to WTO norms and practices. China is expected to join the world trade club by the end of this year.

It is a common practice for the State Council to issue a set of detailed regulations to help implement laws adopted by the National People's Congress, China's supreme legislature. The regulations, with legal power only below that of statutes, are binding nationwide.

Spokesmen from the State Council and the Ministry of Foreign Trade and Economic Cooperation explained that since August 1, Sino-foreign joint ventures are free to buy equipment, raw material, fuel, accessories, conveyance and stationery in China or from abroad. In the past these firms were required to buy Chinese. They are now also able to pay the same price as their Chinese counterparts for materials and services, as opposed to the old biased pricing system.

Restrictions governing joint ventures' sales on the domestic market have also been repealed.

The spokesmen said Chinese businesses planning to establish joint ventures can deliver relevant documents directly to authorities in charge of the approval of such enterprises. In the past, they faced a labyrinthine approval system.

The regulations are in line with amendments to the law which first took effect in 1990.

(China Daily August 4, 2001)


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