What restrictions apply to the investment of foreign funds in China?

Foreign investment in China is governed by China’s Business Ventures Law. This law outlines the restrictions that foreign investors must adhere to when operating in China. First, foreign investors must abide by the “Three Unions” rule, which states that no foreign investment may be made in areas that are deemed “politically sensitive.” These areas include state-owned enterprises, defense companies, and financial institutions. Any foreign investment that is made in these industries must first receive approval from the Chinese government. Second, foreign investors must comply with the “shareholding restriction,” which limits foreign ownership in a Chinese business to no more than 50%. Additionally, foreign investors must adhere to the “capital injection limit,” which requires that no more than 50% of the capital of a Chinese business can be contributed by foreign investors. Finally, foreign investors must also observe the “national treatment” policy, which states that foreign investors must be treated like domestic investors when it comes to taxation and other regulations. In conclusion, China’s Business Ventures Law outlines several restrictions that foreign investors must follow when investing in China. By adhering to these restrictions, foreign investors can ensure that their investment is in compliance with Chinese laws.

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What restrictions apply to the investment of foreign funds in China?

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