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The remarkable economic reforms begun in the People's Republic of China (PRC) in 1979 have made possible transactions between Chinese and foreigners that were previously unthinkable. But the reforms have also caused, and are likely to continue to cause, dislocations and uncertainties which often impair Sino-foreign commercial relationships as they are embodied in contracts. This article discusses two different types of contracts, contracts to establish enterprises in China with foreign direct investment (investment contracts) and contracts to purchase Chinese products for export (export contracts). It further comments on why these contracts often cannot be implemented according to their terms for reasons stemming from the effects of economic reform policies.

This article suggests perspectives on contractual uncertainty which might be appropriate for foreign investors and traders, and notes the influence of several symbols and myths on Chinese and foreign perceptions of contractual relations. Although focused on some practical aspects of the current legal environment for investment and trade in the PRC, this article also invites speculation about some of the forces that are shaping Chinese legal institutions.


Contracts | International Law | Law