China is seeking cooperation from foreign law enforcement establishments to help pursue foreign investors who leave the country without properly liquidating their assets and winding up their business operations in China. According to Xinhua News, the number of foreign investors who have left China without properly winding up their China operations is on the rise in recent years. Most of these investors operate small and labor-intensive businesses. When the foreign-invested businesses become unprofitable, some investors simply disappear and leave behind their capital equipment along with unpaid debts and unpaid wages.
On December 19, 2008, the Chinese government issued an official policy to address the abandonment issue created by these foreign investors. The official policy is entitled "Implementation Guidelines Regarding Irregular Withdrawal of Foreign Investment and Cross-Border Litigation to Protect Chinese Interests." This implementation guideline is jointly issued by the Ministry of Commerce, the Ministry of Foreign Affairs, the Ministry of Justice, and the Ministry of Public Security. The Chinese government wants to use Chinese laws and bilateral treaties, including extradition treaties to pursue those foreign investors who have injured Chinese interests through the illegal abandonment of business operations.
The crux of the working guidelines is that the claimant files its claim against the foreign investor in a Chinese court. After obtaining a judgment from a Chinese court, the claimant may then petition the local law enforcement authorities in the relevant foreign jurisdictions to satisfy the judgment. In cases involving criminal activities or intentional tax evasion of a large sum, the Chinese government may seek extradition to prosecute the suspects in China.
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