Foreign Acquisitions Of Chinese Assets Legal Issues

With the reform of China's state-owned enterprises, we clearly know that the problem of bad management of state-owned assets needs to be resolved. After decades of accumulation, China has had a huge amount of state-owned assets. However, there is only one "Enterprise State-owned Assets Law" to regulate the enterprise state-owned assets so far. And the state-owned assets will easily loss when it is in bad management. Meanwhile, more and more foreign investors show their interest in China's domestic market when China's government carrys out a reform and open policy. Both China's government and state-owned enterprises welcome the foreign investors to involve in the reform of state-owned enterprises. Also, mergers and acquisitions (M&A) is becoming the main style of foreign investment.M&A by foreign investors do propell the reform of state-owned enterprises, but the same time it makes the problem of loss of state-owned assets more serious. The loss of state-owned assets results from parties involved in the mergers and acquisitions:the process of M&A is illegal, the evaluation of state assets is under the real value, the institution performing as the owner of state-owned assets could not perform its duties, local governments try to rent seeking and the risk control mechanism of foreign investment is not perfect. Therefore, many things need to be improved, like the market mechanism of transaction of property rights, the mechanism of assets assessment, the system for management of state-owned assets and the regulatory system for foreign investment. Considering from three major parties involved in M&A, this article wrote about why the state-owned assets was lost and how to prevent it under the current state-owned assets law system.About the structure, this article includes four chapters in addition to introduction and epilogue. Chapter one introduces the problem of loss of state-owned assets. And the next three chapters try to figure out the relation between three major parties and the problem and the legal measures.