The environment of the law and policy for handling of non-performing assets 

     ------by Helen Y. Peng

Speech at “International Forum for Disposition of Non-performing  Assets"

As we know, the fair and reasonable and proper law or policy  which protects the liberalization of investment ,safeguards competition and sustains a fair and orderly market is as important to investors as the fresh air.

People notice that there are about 3000 billion Yuan (RMB) of state-owned assets being sold, most of them are non-performing assets. The private corporation and foreign investors have become the major buyers, however, the foreign investor face to more barriers and difficulty.

Before an investor make any investment, he needs to research the law and policy environment of the aimed district, and then the characters of the investment object will change in the wake of the spirit, system and direction of the law.
The country has perfected the law  in encouraging the foreign direct investment and transnational deal of assets for developing market-economy, such as the Anti-trust Law, the Monopoly and Restrictive practices Act (Inquiry and Control) ,the Company Act etc. These laws thoroughly embody the stands of those counties over transnational assets trade and merge, as well as the policy and inspecting procedure of the government. This will lead to well-balanced opportunities and treatment, opposition to monopolization, fair competition, and transparent market order.

China has put many efforts in establishing  law system to attract foreign investor, but it is not yet perfected. The policy of China imposes many barriers and restrictions on the transaction of state-owned assets except that certain industries have a transitional period knowledge in the frame of WTO contact. An example is, in the auction of stock of the state-owned corporation the attendants are less than the required. We can see that demand is much less than supply of stock of the  state-owned corporation. So ,I agree with the view which state-owned asset should be sell in accordance with the low-cost , so, we can use them at most, but not waste them at least.

International merge has become a major way of international direct investment. The chinese government is adjusting the structure of industry as well as elevating the economy. Reduction of the state-owned assets in some industries, activation of non-performing assets and international merge and trade are major tasks of the government. The state economic & trade commission is busy researching and making the law system of international merge, is creating good environment for foreign capital to buy state-owned enterprises and establishing the system of investigation.

The government and theorists have already noticed large amounts of money of the transnational corporations and their global strategy. And their transnational merge of the state-owned enterprises will easily lead to monopoly. As we know, monopoly is detrimental to fair competition. The consequences are low efficiency and unbalanced market.

In this sense, it is another form of monopoly substituting the original monopoly of the state-owned assets. So, the study and legislative of the Anti-trust Law are very important in the law system.

We believe the situation of investment in China would be better and better for foreign investor, and we are making courageous attempts and great efforts. Without any doubt, this deeds do good for the state-owned assets and legislation.

Some enterprises need overseas subsidiary corporation to face supervision the behavior of the merge.,and we trust  the experience will improve for investigation of international merge.

In the operation of the cases, the private enterprises exert great influence on the transaction of the state-owned assets and merge, they would use large amounts of money to buy good assets. In the other hand, they have a lot of salable technology, such as technology of environmental protection, so, they need a lot of money to occupy the undeveloped market. Consequently, preferential legislation and policy are imminent for private enterprises.

In a word ,the founders and followers of the WTAM have deeply experienced to the legislative and policy and have been proud of participation in transnational merge. Despite there are many points should be improve, but we never doubt the China is the paradise for investment in the world.