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Approval Authority for Foreign Investment Is Delegated in China

28.07.10 23:33 Age: 9 yrs
Approval Authority for Foreign Investment Is Delegated in China

On June 10th 2010, the Ministry of Commerce (MOFCOM) issued the publication Circular on Issues Regarding Delegation of Approval Authority for Foreign Investment (Shang Zi Fa [2010] No.209) (Circular 209). Circular 209 is assumed to be in accordance with several opinions on further improving the work of utilizing foreign investment promulgated by the State Council. Prior to the implementation of Circular 209, the National Development and Reform Commission (NDRC) issued a similar circular to delegate its relevant authority.


Under Circular 209, the authority to approve any changes surrounding an “encouraged” or “permitted” foreign invested enterprise (FIE) that has a total investment of less than US$300 million is now delegated. This delegation of authority also applies to any “restricted” FIE that has a total investment on less than US$50 million. Such approvals may be granted by the provincial counterparts of the MOFCOM (including counterparts in ten "deputy-provincial-level cities" such as Nanjing, Guangzhou, and Xi’an). Before this, only “encouraged” or “permitted” FIEs with US$100 million and “restricted” FIEs with US$50 million can be approved by these counterparts.

“The delegation under Circular 209 facilitates foreign investors and widens local powers to some extent,” asserts Jessie Xu, attorney of Lehman, Lee & Xu, “and it indicates that China’s attitudes towards foreign investors are more open.” However, she goes on to warn that “It may also intensify local protectionism, which is a potential risk for foreign investors.”


Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm has also been recognized as one of the top full service and intellectual property firms in China by several international magazines. The law firm is managed by Mr. Edward Lehman, a leading expert on corporate law with 20 years of practice experience in Mainland China.

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