Legal basis: Law of People's Republic of China (PRC) on Foreign-funded Enterprises.
Article 2 The term "foreign-invested enterprises" as mentioned in this Law refers to enterprises established in China with all their capital invested by foreign investors in accordance with the relevant laws of China, excluding the branches of foreign enterprises and other economic organizations in China.
Article 3 The establishment of a foreign-funded enterprise must be conducive to the development of China's national economy. The state encourages the establishment of foreign-funded enterprises whose products are exported or whose technology is advanced.
Industries in which the State prohibits or restricts the establishment of foreign-capital enterprises shall be stipulated by the State Council.