Beijing will narrow foreign investment loophole

Significance

It existed in a legal grey zone, and was allowed to do so because it served the government’s purposes. That is now beginning to change.

Impacts

• Anti-monopoly investigations against VIE-related companies have been instituted and are likely to strengthen.
• It may become more difficult for VIE founders and executives to dispose of related assets with the same leeway they had before.
• Enforcement of new measures and potential upcoming ones will be highly political, as seen in the delay of the Ant Group IPO.