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Law Amendment Ends Jvs Lawlessness
On April 4, the Law on Chinese Foreign Equity Joint Ventures (CFEJV) was published, according to Beijing Today.
Ma Yu, a senior researcher with the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) took part in revising the law. Ma says that the amendment is a major move on the part of China to prepare for its expected accession to the World Trade Organization (WTO), after more than a decade of negotiations. Though only a few JVs obey the original law, this amendment will bring them under the umbrella of the law. By now, the country has seen the registration of 150,000 Chinese-foreign joint ventures.
Mr. Ma says the revision makes two major changes, which are set out as follows.
1: The original clause reads: The raw and semi-finished materials, fuels, parts and auxiliary equipment needed by the joint venture shall be first bought in China as far as possible, they can also be bought directly in the international market with foreign exchange raised by the joint venture itself.
The Revised Version allows the joint venture to make purchases within its approved scope of business in either the domestic or the international market. Mr. Ma explains that the original law encouraged JVs to favor the local market, but this clause violated WTO rules, and interfered in the JVs' business.
2: One of the original articles has been deleted. It read: The production and operation plan of a joint venture shall be reported to the competent department for the record and be executed in the form of an economic contract. Mr. Ma says this article was set down under the old, planned economy.
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