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New JV rules in place
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PRESIDENT Jiang Zemin signed into law on Tuesday the amendment to Law on Sino-Foreign Equity Joint Ventures, the Xinhua News Agency said on Tuesday.
The Fourth Session of the National People's Congress has already passed the amendment with an overwhelming majority last Thursday, according to Xinhua.
The amendment is the second of its kind in the 22-year history of the law. The first was made in 1990.
Analysts say the amendment, together with the other two similar amendments to a law on Sino-foreign co-operative enterprises and a law on wholly foreign-owned enterprises, represent China's commitment to the WTO and a logic development of the country's fledgling market economy.
The amendment abolish stipulations that require joint ventures to give priority to Chinese-made raw materials when they purchase raw materials for production, and to report their production plans to government departments concerned.
Additions to the draft also include the establishment of trade unions in joint ventures according to law, which will carry out activities and safeguard their legal rights and interests, while the companies are required to provide trade unions with necessary conditions to facilitate their activities.
The old joint venture law requires joint venture companies to buy insurance policies from Chinese insurers, but in the amendment, "Chinese insurers" are changed into "insurers in China", thus bringing it into line with the insurance law.
In the old joint venture law, these firms are required to put their disputes to arbitration. The amendment adds that a case may be brought before the People's Court if joint venture partners fail to include arbitration articles in their contracts or parties involved fail to reach written arbitration agreement.
A representative of the Republic of Korea Chamber of Commerce in Beijing said the amendment will encourage more foreign businesses to invest in China.
According to official statistics, since the promulgation of the joint venture law in 1979, China has approved 360,000 foreign-funded enterprises and attracted US$348 billion in foreign direct investment.
For seven straight years, China has received the most foreign direct investment among developing countries.(SD News)
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