Laws are not often made at China’s municipal, district, or provincial levels. Most of the rules come from the central government in Beijing. China’s legal system is civil law, not common law.

Therefore, China has a law based on French law. China’s congress is the lawmaker. The main purpose of the Chinese courts is to deal with all different types of disputes. There are a few different court levels in China.

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Comprehending China’s Legal Framework

China’s economy is growing again, making it attractive to investors. Investors should use a legal translation agency to help them. China said that its GDP grew by 18.3% in 2021.

That came right after the pandemic, and many were surprised. Some economic experts thought the pandemic would end the Chinese economic miracle, but they’ve been proven wrong. Now that the Chinese economy is moving again, investors worldwide are excited.

China remains one of the most attractive investment destinations in the world today. It is still the number one destination for foreign investments in all of Asia. Even in 2020, during the height of the pandemic, the inflow of FDI into China actually improved. It grew from $141 billion in 2019 to $149 billion in 2020. 

If you’re an investor looking for a great opportunity, China should be on your list. You’ll need help from a legal translation agency, interpreters, and legal experts to ensure you are working within the bounds of the law.

Legal Translation for Drafting Contracts and Other Documents

If you’re determined to invest in China, you don’t have to study their entire legal system. It’s enough that you have a working knowledge of the laws. The important thing is that you have the support of experts who can assist you. 

Regarding contracts or international investment agreements, you need help from a legal translation agency to make things clear for you. You cannot use just any translator to handle legal documents concerning your investments in China. Translating contracts requires knowledge of the country and its system. Fluency in the language is not enough when it comes to legal translation. 

Grasping the Chinese Legal System

Investors must first learn a few things about China before they fully commit to investing there. For example, they must know something about the Chinese legal system.

One does not need a comprehensive overview of the legal system in China. Services like business insiders, legal experts, translators, and interpreters can help investors. However, an investor must understand the laws concerning investors in place there. An investor will need help from a legal translation agency when drafting contracts.

Before January 2020, three laws in China dealt with enterprises with foreign investments. Those laws were the following:

• Law on Wholly Foreign-Owned Enterprises
• Law on Sino-Foreign Co-operative Joint Ventures
• Law on Sino-Foreign Equity Joint Ventures

Foreign investment rules in China

The Foreign Investment Law has superseded these three laws. One of the more interesting provisions of this law is that if the governance structure of a company with foreign investment runs counter to the provisions of other relevant laws like the Company Law, then there must be amendments to be carried out five years after the Foreign Investment Law has been implemented.

The law also establishes the Negative List for Access by Foreign Investors. The sectors on the list are off-limits to foreign investors. When an investor is still interested in an industry that is prohibited, there is still a way to get in. The investor will have to satisfy the conditions set in the law. 

The Foreign Investment Law also establishes a foreign investment information reporting system and a foreign investment security review system. The latter is mandated to conduct reviews of foreign investments that might affect national security.  

Anti-Monopoly Laws

The Anti-Monopoly Law became effective in 2008, and other laws concerning competition in China were introduced. Those laws include the Law Against Unfair Competition, the Price Law, and the Law on the Invitation and Submission of Bids.

As its name suggests, the main target of the AML is monopolistic competition. It does not explicitly prohibit companies from having a dominant position in the market. Instead, the law prohibits players who attain such a position to abuse it. Another necessary provision of the AML is that it gives those harmed by monopolies the right to file a lawsuit in a Chinese court for damages.

The Law Against Unfair Competition was enacted to combat the manufacturing of poorly made products, unfair competition, false advertising, and other practices seeking an unfair advantage.

Anti-corruption Laws

China has been trying to crack down on corruption in recent years, and this crackdown has affected high-ranking officials. 

China has agreed with other countries that it needs to crack down on corruption. In light of that aim, the country has enacted anti-corruption laws that affect businesses. These regulations can be divided into four levels:

• state anti-corruption policies
• party discipline and regulations
• criminal laws and regulations
• civil and administrative regulations

Commercial bribery is one of the main things the laws fight against. Investors interested in China should be concerned about these laws, but many other laws can affect them.

Investors will also benefit from being supported by interpreters and actual Chinese lawyers. They can help during negotiations by ensuring everyone complies with Chinese laws.

Navigating the labyrinth of the Chinese legal system as an investor can be a daunting task. But when you have the correct support backing you up, you will be more confident in facing your chosen new market. 

You can see some helpful articles about the Chinese legal system below:

• Getting Arrested In China
• Setting Up A Joint Venture With A Chinese Company
• Immigrating To China

How The Chinese Legal System Works