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Hastings Business Law Journal

Authors

Yumeng Xu

Abstract

Trade disputes between the United States and China have caught momentary worldwide attention. However, because the world’s two largest economies are interlocked in various aspects, it is hard to cut these connections, despite Washington and Beijing’s constant effort to dwindle each other’s impact. As one of the major sources of foreign investment for the U.S., China has been adjusting its capital control policies for years in response to development needs and in order to address the changing investment environment in foreign countries. This Note spotlights China’s latest outbound capital control regulation, NDRC Regulation No. 11 (“Reg. No. 11”), and how it suits China’s strategic plan of “made in China 2025.” Briefly, this Note will also analyze this regulation’s potential impact on U.S. policy on China’s investment funds.

This Note first argues that this newly tightened capital control policy loosens control over certain types of investments. Second, this Note discusses the rationale behind the design of Reg. No. 11— to serve the strategic “Made in China 2025” plan. Third, this Note examines the effectiveness of the new measurement in dealing with existing loopholes and obstacles set by countries of destination, such as the FIRRMA of CFIUS.

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