China is considered as Asia’s biggest economy and has been accelerating through the opening of its financial sector. China presents numerous opportunities for investors due to the vast emerging markets in the short term but also in the long run (Rogers, 2014). China has opened its financial sector to foreign investors to compete with the domestic sector. The investment policy indicates growth since Chinese systems has always protected its homegrown industries from foreign competitions by limiting ownership of local firm by foreigners (Nordin & Weismann, 2018).
China practices a socialist legal system which has seven branches. China also has four levels of law which include the constitution, administrative regulations, autonomous regulations, and the specific rules and other rules (Shaikh & Weber, 2018). The seven branches include namely constitution and its laws which govern the political structure and governance such as the arising matters such as state sovereignty, in the formation of the state, its organization, functions, and powers. The civil and commercial laws to govern trade and business in domestic and foreign investment enterprises in the country.
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The administrative laws deal with governmental policies and reforms with a particular system for specific regions and autonomy systems in the grass root levels. Economic laws govern the primary economic system, state and progress of the economy in financial systems taxation banking, foreign trade and customs (Chu, 2018). Social laws to regulate the social issues such as citizens’ rights in political and economic participation criminal laws to control crime and behavior conduct of its citizens in matters of deprivations of rights criminal offenses and punishments (Shaikh & Weber, 2018). The litigation and non-litigation procedural laws focus on litigation and arbitration systems various issues concerning the laws enacted by the national party.
China practices the socialist system; the political structure is based on China communist party CCP and the central state government. The Chinese government is stable, but in need of reforms especially the party congress is in need of a reshuffle in the ruling party central committee. It also faces economic instability after the accumulation of debt to sustain their smokestack industries which need to be addressed with a shift of priorities from the growth of the sectors to stability in collaboration with the central bank (Shaikh & Weber, 2018).
The major political issues involve their trade relations with the US where US president Donald Trump has attacked the Beijing’s currency practices and questioned the longstanding US policy on the third rail issues of Taiwan (Nordin & Weismann, 2018).. The political and economic struggles have continued to persist with China experiencing an economic depreciation as it seeks ways to resolve the trade war.
China has an established intellectual property system that governs the conduct of business has been a world trade organization member since 2001. As a member, the WTO requires intellectual property protection inclusions in the national laws (Rogers, 2014). China has patent laws which protect commercial and technological inventions operated from ‘first to file’ principles application system. The Chinese Trademark system and marketing conventions safeguard signs symbols logos words and sounds in distinguishing products from competitors. For foreign businesses, it requires registration under the Madrid protocol which takes 18 months or directly through the domestic China system which between two and a half and four years.
Important knowledge for investors before investing in China is the current trade war between the US and China which presents a risk for investors. Investors should be aware of the ongoing uncertainty over the response of China to the US trade war (Chu, 2018). The concern for investors lies in the reaction which can occur in two ways by China weakening the Yuan or conducting a sale of its US treasury holdings which will increase instability in the stock market which will lower confidence in their economic performance.
The decision to invest in China requires critical evaluation of its economy, due to its vigorous expansion over the years investors have experienced problems such as counterfeiting of goods and advantages such as diversification and fair practice. I would recommend investments in China based on its continuous growth and availability of opportunities. At the same time, I would urge the investors to conduct in-depth research on investments and be prepared and anticipate problems by consulting investment experts in China.
References
Chu, A. C., Fan, H., Shen, G., & Zhang, X. (2018). Effects of international trade and intellectual property rights on innovation in China. Journal of Macroeconomics , 57, 110-121.
Nordin, A. H., & Weismann, M. (2018). Will Trump make China great again? The belt and road initiative and international order. International Affairs , 94 (2), 231-249.
Shaikh, A., & Weber, I. (2018). The US-China Trade Balance and the Theory of Free Trade: Debunking the Currency Manipulation Argument (No. 1805).
Rogers, J. (2014). A bull in China: Investing profitably in the world's greatest market . New York: Random House
