The China Venture
The China Venture The China Venture
ACKNOWLEDGEMENTS I wish to thank the Grundlagenforschungsfonds (GFF) of the University of St. Gallen for supporting the employment of assistants, Peter Lindstrom, Anita Subramanian and Matthias Weibel, to work on the project. I also wish to thank the many student-authors who have contributed to the work of these three books, in terms of their articles, revisions and updates and other editorial and secretarial assistance. In particular, I would like to thank Oliver Kabuth, Klaus Kukovetz, Matthias Weibel, Michael Loretan, Cinderella von Dungern, Rainer Kirchhofer, Stephan Lechner, Matthias Kästner, Brigitta Joho and Jürgen Müller, for their contributions to the China Venture book; Peter Lindstrom, the students of the Vietnam study group (Marc Ammann, Verena Antl, Andreas Barfuss, Andrea Baumeister, Christian Chalut, Fabian Engl, Thomas Glesti, Urs Graf, Thomas Gysi, Benjamin Jäggi, Brigitta Joho, Monica Kirchhoff, Chantal Landert, Florian Lanz, Robert Liebl, Jürgen Müller, Oliver Schwarz, Pascal Sommerhalder, Joel Widmer and Antonia Zambon, including my assistants Reza Rahimi, Klaus Kukovetz and Peter Lindstrom), Stefan Otto, Reza Rahami, Tina Habicht, Philipp Reese, Marco Sütterle, Peter Geiser, Matthias Kästner, and Christian Carduck, for their contributions to the Emerging Asia book, and Anita Subramanian, Peter Lindstrom, Marusa Fasano, Christian Börstnar, Marc Oesch, Andreas Barfuss, Sven Graber, Stefan Graf, Gabriel le Laidier Robert Liebl, and Daniel Seeli, for their contributions to the Asia Businesses in Europe book. Finally, I wish to thank my secretary, Kristina Stalder and my personal assistants, Mirweiss Meidanval and Ricarda Ross for their often unseen and unacknowledged help in my work place. Li Choy Chong ii
Table of Contents List of Figures ..........................................................................................................................viii List of Tables .............................................................................................................................ix Abbreviations ..............................................................................................................................x 1. INTRODUCTION: THE CH INA VENTURE ............................................................ 1 2. THE CHINESE BUSINESS ENVIRONMENT .......................................................... 4 2.1 THE CHINA REFORM STORY (BY MATTHIAS WEIBEL) ...................................................4 2.2 THE LEGAL SYSTEM IN CHINA (BY DR. MICHAEL LORETAN )........................................6 2.2.1 Chinese Legal History..............................................................................................7 2.2.1.1 Traditional Chinese Law ..................................................................................7 2.2.1.2 Modern Chinese Law .......................................................................................8 2.2.2 Governmental structure..........................................................................................10 2.2.3 Legal structure ........................................................................................................11 2.2.4 Judicial Structure ....................................................................................................12 2.2.5 Current problems of the operating legal system ....................................................14 2.2.6 Foreign Investment Law ........................................................................................15 2.2.7 Contract law ...........................................................................................................16 2.2.8 Company Law ........................................................................................................17 2.2.9 Conclusion .............................................................................................................18 2.3 BUSINESS FINANCE IN CHINA (BY CINDERELLA FREIIN VON DUNGERN) .....................19 2.3.1 Financial framework for foreign direct investments..............................................20 2.3.1.1 Financial sector development in China ..........................................................21 2.3.1.2 Financial institutions ......................................................................................23 2.3.1.3 Legal framework for financial structuring .....................................................30 2.3.1.4 Instruments of financial control in China .......................................................32 2.3.2 China’s financial markets.......................................................................................35 iii
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- Page 5 and 6: 3.2.3.2 Special Funds for Setting U
- Page 7 and 8: 3.4.1.1 National Culture ..........
- Page 9 and 10: List of Tables TABLE 2-1: THE AREAS
- Page 11 and 12: GBP Pounds Sterling GDB Guangdong D
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- Page 17 and 18: co-operate with other firms, especi
- Page 19 and 20: The Chinese operating legal system
- Page 21 and 22: First of all, Britain’s predomina
- Page 23 and 24: democratic centralism, all governme
- Page 25 and 26: The courts are the state organs exe
- Page 27 and 28: more than three hundred intermedia
- Page 29 and 30: 2.2.8 Company Law China’s first n
- Page 31 and 32: Things seem have to become a lot cl
- Page 33 and 34: 2.3.1.1 Financial sector developmen
- Page 35 and 36: securities, trading, initial public
- Page 37 and 38: underdeveloped compared with market
- Page 39 and 40: established in January 1996 by 59 p
- Page 41 and 42: Chinese Banks Foreign Banks Financi
- Page 43 and 44: system formulation has been put on
- Page 45 and 46: The separation of production and co
- Page 47 and 48: swap centres (see also above). From
- Page 49 and 50: investors with little experience an
- Page 51 and 52: them, while a branch with a shortag
Table of Contents<br />
List of Figures ..........................................................................................................................viii<br />
List of Tables .............................................................................................................................ix<br />
Abbreviations ..............................................................................................................................x<br />
1. INTRODUCTION: THE CH INA VENTURE ............................................................ 1<br />
2. THE CHINESE BUSINESS ENVIRONMENT .......................................................... 4<br />
2.1 THE CHINA REFORM STORY (BY MATTHIAS WEIBEL) ...................................................4<br />
2.2 THE LEGAL SYSTEM IN CHINA (BY DR. MICHAEL LORETAN )........................................6<br />
2.2.1 Chinese Legal History..............................................................................................7<br />
2.2.1.1 Traditional Chinese Law ..................................................................................7<br />
2.2.1.2 Modern Chinese Law .......................................................................................8<br />
2.2.2 Governmental structure..........................................................................................10<br />
2.2.3 Legal structure ........................................................................................................11<br />
2.2.4 Judicial Structure ....................................................................................................12<br />
2.2.5 Current problems of the operating legal system ....................................................14<br />
2.2.6 Foreign Investment Law ........................................................................................15<br />
2.2.7 Contract law ...........................................................................................................16<br />
2.2.8 Company Law ........................................................................................................17<br />
2.2.9 Conclusion .............................................................................................................18<br />
2.3 BUSINESS FINANCE IN CHINA (BY CINDERELLA FREIIN VON DUNGERN) .....................19<br />
2.3.1 Financial framework for foreign direct investments..............................................20<br />
2.3.1.1 Financial sector development in <strong>China</strong> ..........................................................21<br />
2.3.1.2 Financial institutions ......................................................................................23<br />
2.3.1.3 Legal framework for financial structuring .....................................................30<br />
2.3.1.4 Instruments of financial control in <strong>China</strong> .......................................................32<br />
2.3.2 <strong>China</strong>’s financial markets.......................................................................................35<br />
iii