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China considers regulating foreign investment loophole

Published by Steve Coleman on September 20, 2011

The Chinese government may step in and regulate a corporate structure allowing Chinese companies to tap foreign investment through shell holding companies.

Variable-interest entities allow foreign partners to reach an agreement with Chinese firms allowing them to collect a share of revenue in exchange for services.

China currently prohibits direct foreign involvement in sectors like telecommunications, software, steel making, education and agriculture.

A Bloomberg story further explores the issue.

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