Research Into Governmental Regulation On The M&A Of State-owned Enterprises By Foreign Capital

Governmental regulation refers to normalization, control and restriction of governmental sectors over the micro economical activities according to laws and regulations. The Merger & Acquisition (M&A) of state-owned enterprises (SOE) by foreign capital has a great significance on optimization of domestic industrial organization structure and on promotion of the competitive power of national enterprises in world market, yet, it may cause loss of national property through the practice of"renting"and"cooperation"during the trade, and lack of balance between partial interest and overall interest, short-time interest and long-run interest. It is an urgent and practical issue to tackle the problems in the M&A of SOE by foreign capital, and to enact a series of regulations over the M&A so as to normalize the practices. Not only should the regulations over the M&A be strengthened to realize our ultimate aim of utilizing foreign capital, but also efforts should be made in constant improvement and normalization of governmental regulation.The M&A of SOE by foreign capital being a new way of direct investment of foreign capital, a complete system of governmental regulation is not yet established in China mainly for lack of rules about the M&A and for absence of an anti-monopoly law, together with incompleteness and decentralization of the existing laws and regulations which fail to form a resultant force over the M&A. The research of Chinese scholars in this field presently focus on the relationship between governmental regulation and multinational enterprises, on legal regulation over the M&A of SOE by foreign capital and on preferences of the regulation. Based on the comparison among the practices of developed countries, namely, USA, Germany and Japan, in governmental regulation on the M&A by foreign funds, the paper proposes that rules about the M&A should be, on the basis of referring to the experiences of foreign countries, constituted in China in accordance with the status quo of Chinese economy, industrial structure and international conventions which include the design of the system of governmental regulation, the set of its aims, its content and detailed regulation arrangement, etc. And the detailed content of governmental regulation should specify the special areas that are closed for foreign capital and the important industries where governmental restriction is involved, making clear the control over the M&A of businesses in other countries by big corporations and over the foreign stock-holders of important industries.The paper analyzes the governmental regulation on the M&A of SOE by foreign capital with such methods as comparative analysis, comprehensive analysis and case study, bringing about the following conclusion: The government should encourage the M&A of SOE by foreign capital on the one hand, and strengthen regulation on multinational enterprises in the country by enacting anti-monopoly law, improving the legal system about competition and the industrial strategies, laws and regulations. Governmental regulation on the M&A of SOE by foreign capital should put emphasis on improvement of industrial security and anti-monopoly precaution mechanism, reinforcement of normalized evaluation of SOE, promotion of fair play by adopting corresponding policies in accordance with different kinds of SOE, and cultivation of a institutional environment friendly to the development of M&A by foreign capital. The paper is a comprehensive multi-subject research from the perspectives of morality, social sense and cultural security and is based on analyzing and summarizing other researchers'achievements.