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promulgation)
Law of the People’s Republic of China on Administration of the Urban Real Estate (Adopted at the Eighth Meeting of the Standing Committee of the Eighth National People’s Congress on July 5, 1994, promulgated by Order No.29 of the President of the People’s Republic of China on July 5, 1994, and effective as of January 1, 1995)
Detailed Rules of Ministry of Construction Concerning Examination and Approval of Sino-Foreign Joint Venture Enterprises (Ministry of Construction, effective as of 28th June, 1996)
Construction Law of the People’s Republic of China (National People Committee, effective as of 1st Mar. 1998)
Regulations on Urban Real Estate Development and Management Control (Promulgated by Decree No. 248 of the State Council of the People’s Republic of China on July 20, 1998)
Provisions on the Establishment of Foreign-Funded Construction Enterprises (Promulgated by the Ministry of Construction and the Ministry of Foreign Trade and Economic Cooperation on September 18, 1995)
Market Access and Foreign Participation
Prior to China’s accession to the WTO, real estate was categorized in the then-current version of the Foreign Investment Industrial Guidance Catalogue (Catalogue) as a "restricted" industry and foreign investors were prohibited from establishing wholly foreign-owned enterprises (WFOEs) in the real estate sector.
As a result of revisions to the Catalogue in 2002 that reflect China’s commitments set forth in its Protocol of Accession to the WTO (Protocol), development and construction projects of ordinary residential housing are now "encouraged" and foreign investors may freely participate in such projects in the form of WFOEs or joint ventures (JVs). However, the new Catalogue does not provide any guidance on the distinction between ordinary residential housing projects and other residential housing projects.
Although China reserved its right in the Protocol to prohibit foreign companies from establishing WFOEs to engage in high-level real estate projects (except for luxury hotels), i.e., those with unit construction costs exceeding double the average for the same city, the new Catalogue merely categorizes construction and operation projects of deluxe hotels, villas, office buildings and international conference centres as "restricted". In practice, officials of the Ministry of Commerce have stated that notwithstanding China’s reservation of rights in the Protocol, such high-level real estate projects may be carried out by foreign companies in the form of WFOEs. Nevertheless, it should be noted that China would not contravene its WTO commitments if it later prohibits foreign companies from establishing WFOEs to carry out such projects.
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