BLP

There is a saying in Shanghai every local knows that goes «a bed in Puxi is better than a house in Pudong». Indeed, there was a time not too long ago Shanghainese people would rather have a bed than a house based on location. However, in a few decades the saying became a myth when the Pudong area in Shanghai transformed from flat rice fields into a megacity within a few decades. Now in the far East city of Shanghai, in an area known as Pudong, a seemingly unrealistic futuristic multicolored skyline brightly pierces the sky every night.

China’s early 20 th century economic policies stunted its growth initially. However, after the passage of several open door policies in the late 20 th century, Chinese foreign investment law created a pathway for foreign direct investment into China. China quickly set up special economic zones in order to experiment with their new liberalization of foreign investment laws. Shanghai became a special economic zone which enjoyed even further liberal foreign investment laws. Foreign direct investment, especially in the financial sector in Shanghai, thrived under China’s new laws. This Article looks at the initial foreign investment laws, including company law, and the evolution of those laws in recent years. The Article also includes examples of shifts in China’s economy and uses Shanghai as a model as the direct affects Chinese law has on its economy. As powerful as Shanghai has transformed, there are still many reforms China should apply, in policy and law, in order to realize its potential of establishing itself as the most powerful country of the 21 st century.