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| Legislators Debate Foreign Involvement in Partnerships |
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Chinese lawmakers resumed on Sunday a debate on a legislative amendment that could allow foreigners to enter legal partnerships in China. However, concerns were raised in the Standing Committee of the National People's Congress (NPC) that partnerships involving foreigners could buy up China-registered intellectual property rights for foreign profit. Legal experts believe that the draft amendment to the Partnership Law, which defines "partner" as a company or an individual, could usher in a new form of foreign investment, if passed. The draft amendment that "foreign entities or individuals should comply with the relevant Chinese regulations when establishing a partnership in China" will alter the 1997 Partnership Law. Experts told the Standing Committee that existing general partnership law required all partners to assume unlimited liability for the debts of a firm. However, creditors' interests could be harmed due to facts in cases where foreign partners had no other business interests in China, or where their personal assets resided abroad, making it hard to retrieve losses if the partnership failed. "At present, foreign venture capital outweighs that of domestic counterparts, so we should study carefully the nature of the foreign capital in China and how it is used," said lawmaker Lu Ming. Some foreign venture capital was used to buy China-developed scientific innovations with intellectual property rights to China's detriment, Lu said. However, fellow lawmaker Chen Zhangliang said, "We cannot deny foreign entities the right to form partnerships in China just because there are difficulties." China-foreign partnerships could even promote the development of innovation in China, said Chen. Experts believe the amendment could benefit partnerships within traditional industries and boost the high-tech and service sectors. Under China's legislative system, a bill can be made law after it passes, usually, three rounds of hearings in the national legislature. The Standing Committee of the NPC meets every two months. (Xinhua News Agency June 26, 2006) |
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