CHINA Law and Practice Contributed by: Yan Gao, Yilin Wang and Zhuohui Li, Zhong Lun Law Firm
Development Co, Ltd, Jinko Power Technology Co, Ltd, Tongwei Co, Ltd, and Sungrow Renewables Development Co, Ltd, among others. Private participation in transmission and distribution remains limited. Private entities are permitted to oper- ate only in regional distribution networks and virtually none operates a national network. Notable private entities active in this space include GCL Group Hold- ings Ltd, Zhejiang Chenfeng Technology Co, Ltd, and Fujian Zhong Power Supply Co, Ltd. 1.3 Foreign Investment Review Process China encourages foreign investment and protects the lawful rights and interests of foreign investors. The Foreign Investment Law (effective 1 January 2020) establishes the foundational framework for foreign investment, confirming the pre-establishment national treatment plus negative list management system. China imposes no market access restrictions on foreign investment in the power industry, with the exception of nuclear power plants, which must be Chinese-controlled under the Special Administrative Measures for Foreign Investment Access (Negative List) (2024 Edition) (NDRC and Ministry of Commerce, effective 1 November 2024). Outside this exception, the Catalogue of Industries Encouraged for Foreign Investment (2025 Edition) (NDRC and Ministry of Commerce, effective 1 February 2026) identifies new energy sectors including wind, solar, hydrogen, clean energy power stations, virtual power plant operation and independent energy storage as priority areas for foreign investment. Establishing a Foreign-Invested Enterprise The principal steps for establishing a foreign-invested enterprise in China are as follows. • Negative list compliance review: The proposed business activities must first be assessed against the foreign investment negative list. Restricted or prohibited activities will result in refusal of subse- quent applications. • Pre-approval of sector-specific licences (if required): Where the proposed activities require an industry-specific licence, approval must be
obtained from the competent authority prior to registration. • Market entity registration: The investor submits the requisite documents to the Administration for Mar- ket Regulation to obtain a business licence. • Post-registration filings with relevant authorities include: submission of the foreign investment information report (commerce department); engrav- ing of the official seal (public security department); tax registration and invoice application (tax depart- ment); social insurance registration (social security department); registration as an import and export goods consignee and consignor through the China International Trade Single Window, where applica- ble (customs); foreign exchange registration with the Foreign Exchange Administration; and account opening at a bank. Foreign investors are generally able to enter China’s power industry on a pre-establishment national treat- ment basis, subject to compliance with the Anti- Monopoly Law (effective 1 August 2008, most recently amended in 2022) and the Security Review Measures for Foreign Investment (NDRC and Ministry of Com- merce, effective 18 January 2021). Foreign-invested enterprises benefit from protections under the Foreign Investment Law. Article 5 confirms that the state protects foreign investors’ investments, returns and other legitimate rights and interests. Arti- cle 20 provides that expropriation may only occur in exceptional circumstances of public interest, must fol- low legal procedures, and must be accompanied by timely and fair compensation. Article 21 further guar- antees foreign investors the right to freely remit into and out of China their contributions, profits, capital gains, asset disposal proceeds and other returns, in either CNY or foreign currency. 1.4 Sale of Power Industry Assets During the construction phase, a transfer of assets in a project that has obtained government approval or filing under the Regulations on the Approval and Filing Management of Enterprise Investment Projects (State Council, effective 1 February 2017) will result in a change of investor. For approval-based projects, the transferor must apply to the competent development and reform commission to amend the original approv-
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