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The China Securities Regulatory Commission (CSRC) has revised the rules on margin trading and short selling in response to the current conditions surrounding China's stock market.

On March 15, 2010, Shanghai Municipal Government approved a pilot program in which foreign investors may become qualified foreign limited partners ("QFLP") of private equity investment funds ("Pilot Program") on its executive meeting. The Pilot Program, which is subject to confirmation and approval of the State Administration of Foreign Exchange ("SAFE") and other relevant authorities, is expected to be officially announced soon.

In response to mounting calls for liberalization of its lucrative securities industry to foreign investors, the China Securities Regulatory Commission ("CSRC") revised the Rules on Establishment of Securities Companies with Foreign Equity Participation on 28 December 2007 (the "Revised Rules") and issued the Provisions for the Establishment of subsidiaries of Securities Companies (Trial Implementation).

Many international companies are considering options such as establishing their manufacturing or trading entity in China.

China has been a magnet for foreign direct investment (FDI) in recent years, however the investment environment has become somewhat more complex as China’s economy has developed and attitudes to foreign investment have changed.

Recent events foreshadow the opportunities and challenges that Chinese companies and their investors will face in both the U.S. and People’s Republic of China as they seek to access the public capital markets.

On August 8, 2006, the Ministry of Commerce ("MOFCOM"), joined by the State-owned Assets Supervision and Administration Commission of the State Council, State Administration of Taxation, State Administration for Industry and Commerce, China Securities Regulatory Commission ("CSRC") and State Administration of Foreign Exchange, amended and released the Provisions for Foreign Investors to Merge and Acquire Domestic Enterprises (the "M&A Rules").

There are a number of business sectors in China such as telecommunications services, online commerce and auction in which direct foreign investment is restricted. Limits are placed on the percentage amount of foreign ownership of companies in these sectors.

The State Administration of Foreign Exchange of China ("SAFE") has issued new rules, effective as of November 1, 2005, on foreign exchange registration concerning equity financing transactions through offshore "special purpose companies" ("SPCs") and their onshore investment in China.

On 29 March 2010, the Shanghai No. 1 Intermediate People’s Court (the Court) finally handed down its sentence in the most long awaited and controversial case involving Chinese or Chinese-born employees of foreign companies in recent memory. Stern Hu, the Chinese-born Australian national, and the other three Chinese employees of Rio Tinto (the Employees), were convicted of stealing commercial secrets and taking bribes, and were handed prison terms ranging from 7 to 14 years.

The total foreign investment into China for the first 9 months of 2007 amounted to about US$47 billion, an increase of 10.9% from 2006.

India is now the fourth largest economy in the world and the second fastest growing economy in the world. With consistent 7% growth during the past few years it is chasing and catching the Chinese Dragon, which is trying to depress a growth rate of 9+% to avoid overheating. Both economies desire and require foreign investment.

The new Circular aims to simplify foreign exchange administration procedures for inbound and outbound direct investment.

A Citibank led consortium won the bid for 85.6% of Guangdong Development Bank in December 2006 for RMB24.27 billion, ending a long battle with rivals French Bank Societe Generale and China’s second largest insurer Ping An Group. The deal coincides with the changes to rules governing foreign banks in China.

China’s central bank has taken further steps to liberalise the country’s tightly controlled capital outflow, allowing some Chinese domestic companies to use domestic renminbi for overseas direct investment, and further demonstrating the Chinese government’s firm commitment to steadily progress its renminbi internationalisation agenda.

It has been four years since China became a member of the World Trade Organisation. During that time it has implemented a number of changes to its formerly command-based economy to open up its markets to foreign investment and competition.