The New Foreign Investment Law of China: Implications for Variable Interest Entities

Abstract

This thesis will focus on the analysis of the new Foreign Investment Law promulgated in China on March 15th, 2019 and entered into force on January 1st, 2020. This new law can be considered a symbol of China’s ongoing process of liberalization of its market towards the outside, since its main objective is to establish a level-playing field for both domestic and foreign enterprises. Along with its promulgation, the Foreign Investment Law has also repealed the old Three Foreign-Invested Enterprise Laws (Sino-Foreign Equity Joint Venture Law, Wholly Foreign-Owned Enterprise Law and Sino-Foreign Contractual Joint Venture Law), marking an important step in the Chinese legal framework regulating foreign investments. The thesis will first start with a brief historical introduction, which will contextualize the promulgation of this new law, and then an analysis of the factors which pushed it will be provided. Secondly, the work will focus on the practical analysis of the Foreign Investment Law from a comparative perspective, studying the changes in different fields from the previous laws. Eventually, the focus will shift to the Variable Interest Entities (VIEs) structure, providing a case-study under the new regulation of the Foreign Investment Law, in order to demonstrate the trend of liberalization brought by this new law.