Washington International Law Journal


Investors and the Chinese government tout the March 2010 authorization of the Foreign Invested Partnership as an exciting new method for foreign investment in China. However, this comment argues that the Foreign Invested Partnership is not likely to become a vibrant short or long-term platform for foreign direct investment. The historical trends of China’s three other vehicles for foreign direct investment from 1979 to the present provide two key conclusions. First, foreign investors will not utilize Foreign Invested Partnerships until they receive detailed implementing regulations from China’s central government. Second, support or restrictions from the Chinese government can drive or inhibit use of an investment vehicle. China’s Foreign Invested Partnership lacks detailed regulations, and is also not likely to receive them in the future because of increased involvement with local authorities. Additionally, it is not likely to receive support from the Chinese government because of lingering suspicions of the partnership enterprise and an ongoing political transition. Because foreign investors will shy away from this unpredictability, the Foreign Invested Partnership is not likely to be widely utilized in the short or long term. The author recommends that Foreign Invested Partnership proponents overcome these hurdles by pushing for detailed, favorable regulations for equity investment-focused Foreign Invested Partnerships.

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