State Council Clamps Down on Fixed Return Projects

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clpstaff &clp articles

Freshfields Bruckhaus DeringerWhile the Chinese central government has long prohibited the practice of "guaranteed fixed returns" whereby the Chinese party…

Freshfields Bruckhaus Deringer

While the Chinese central government has long prohibited the practice of "guaranteed fixed returns" whereby the Chinese party or local government guarantees a foreign investor's receipt of a minimum fixed return on its investment, this practice is common in infrastructure projects, including power plants, toll roads and water supply networks. The General Office of the State Council issued a notice on September 10 2002, entitled Issues Relevant to the Proper Handling of Current Projects with Guaranteed Fixed Returns for Foreign Investors Circular (the Circular), which indicates that the government is refocusing its attention on this issue.

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