On June 25, 2008, the Standing Committee of the National People’s Congress (NPC) began its second review of the draft State-Owned Enterprises (SOE) Assets Law (formerly the State-Owned Assets Law) and recommended a number of amendments, including a provision banning ‘malicious collusion’ aimed at curbing the conversion of state-owned assets to private assets through management buyouts and the establishment of SOE affiliates.

As part of the Chinese government’s efforts to prevent the drain and misuse of state-owned assets under the disguise of privatization, the draft SOE Assets Law lays ground rules for state-owned assets transfers, appraisal, and SOE reform, which may affect the foreign purchase of state-owned assets. The Chinese government began work on the law in 1993, and the law’s first draft was submitted to the NPC for review in December 2007. It remains unclear when the SOE Assets Law will be promulgated