CHINA¡¯S NEW RULES FOR FOREIGN INVESTMENT

BEIJING, China -- April 15, 2010 -- The State Council of China released concerning new rules on overseas investment last Tuesday. According to the ¡°several opinions of the State Council on further utilizing foreign capital¡± (¡°Opinions¡±), business conditions for foreign investment will be further improved and foreign investment utilizing structures will be optimized.

According to the ¡°Opinions¡±, foreign investment in high-tech industries, service sectors, energy-saving and environmental protection are still welcome, but polluting and energy-gorging or projects in industries running at overcapacity are not wanted. Foreign-funded enterprises are also encouraged to increase their investment in China's central and western regions, particularly in environment friendly and labor-intensive companies. ¡°This shows that the structure of foreign investment will be further adjusted,¡± said Edward E. Lehman, Managing Director of Lehman, Lee & Xu.

According to the ¡°Opinions¡±, China will continue to support Chinese A-share listed companies in further introducing strategic investors from home and abroad, and standardize foreign companies' investment in domestic securities and corporate merger and acquisition moves. A national security examination mechanism will be built as soon as possible for foreign-funded companies' merger and acquisition operation, and qualified foreign-funded companies are allowed to go public, issue corporate bonds or medium-term bills in China. ¡°Foreign-funded enterprises will have more opportunities and enjoy the same treatment as their Chinese counterparts¡±, commented John Lee, Senior Lawyer of Lehman, Lee & Xu.

¡°In addition, importing items for scientific and technological development by qualified foreign-funded R&D centers will be exempt from tariffs, importing value added tax and goods and service tax by the end of 2010.¡± said Scott Garner, Director of Lehman, Lee & Xu Shanghai Office. ¡°This is another indication that high-tech foreign enterprises are fully encouraged in China.¡± Mr. Garner commented.



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