Law of the People's Republic of China on Wholly Foreign-owned Enterprises

Law of the People's Republic of China on Wholly Foreign-owned Enterprises

Order of the President of thePeople's Republic of China No. 39

April 12, 1986

(Adopted at the Fourth Session of the Sixth National People'sCongress and promulgated by Order No. 39 of the President of thePeople's Republic of China on and effective as of April 12, 1986)

President of thePeople's Republic of China Li Xiannian

Article 1 With a view to expanding economic cooperation andtechnical exchangewith foreign countries and promoting thedevelopment of China's national economy, the People's Republicof China permits foreign enterprises, other foreign economicorganizationsand individuals (hereinafter collectively referredto as " foreign investors ") to set up enterprises with foreigncapital in China and protects the lawful rights and interests of suchenterprises.

Article 2 As mentioned in this Law, " enterprises with foreigncapital " refers to those enterprises established in China byforeign investors, exclusivelywith their own capital, inaccordance with relevant Chinese laws. The term does not includebranches set up in China by foreign enterprises and other foreigneconomic organizations.

Article 3 Enterprises with foreign capital shall beestablished in such a manner as to help the development of China'snational economy; they shall use advanced technology and equipment ormarket all or most of their products outside China.
Provisions shall be made by the State Council regarding thelines of business which the state forbids enterprises with foreigncapital to engage in or on which it places certain restrictions.

Article 4 The investments of a foreign investor in China, theprofits it earns and its other lawful rights and interests areprotected by Chinese law.
Enterprises with foreign capital must abide by Chinese laws andregulations and must not engage in any activities detrimentalto China's public interest.

Article 5 The state shall not nationalize orrequisition any enterprise with foreign capital.
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