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Volume 14,Issue 3 Autumn 2012

From Closed to Open with FDI


30 years ago, civil aviation in China self-developed in a relatively closed environment. 30 years later, with constantly changing policies and reforms it is opening up, especially with 30 billion U.S. dollars in foreign capital being injected into the China civil aviation industry through overseas listing and financing, establishing joint-ventures and foreign-owned enterprises, purchasing shares of domestic civil aviation enterprises, and other methods. The PRC Sino-Foreign Equity Joint Venture Law was implemented on July 8th, 1979. 8 months later, The Foreign Investment Joint Venture Approval License (1980) No. 001, Beijing Aviation Food Co., Ltd. was founded after approval by the PRC. The Foreign Investment Management Committee in April of 1980 was the first joint venture enterprise approved. So civil aviation helped to fill gaps in food production in China, as a prelude to attracting foreign investment and setting up three types of foreign-funded enterprises. From 1987-1993, before the third Plenary Session of the 14th Communist Party of China’s Central Committee, was the second phrase. Separating government administration and enterprise and separating airport and airlines led to a wide variety of investment patterns. In order to speed up civil aviation airport construction, a large number of foreign funds and domestic bank loans flowed in together. From 1993-2001, there was the third phrase. During this period, there was a private and foreign capital influx into the civil aviation industry, through the overseas listing and joint-venture startups. The civil aviation industry completed round after round of rapid development of capital accumulation. Now From 2002-Present is the fourth stage. Clearly, now foreign capital is not only an indispensable component in the civil aviation system reform and transformation from a single investment to diversified investments, but it is also a magic weapon for foreign capital participating in the reorganization and transformation of air transport enterprises, to improve foreign companies’ asset-liability ratios.

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