With the rapid economic expansion of the People’s Republic of China (“PRC”), a demand for all types of infrastructure has arisen. This demand has to date been largely addressed by reliance on local state owned enterprises. International construction enterprises have sought to gain a foothold but have faced significant barriers to entry. With effect from 1 January 2007, China has fully acceded to its obligations under the World Trade Organisation (“WTO”) and announced a new regulatory regime which when implemented will provide new opportunities for international construction enterprises to develop their businesses. This article will explore the emerging legal framework for the establishment and operation of foreign-invested construction engineering design enterprises in China, within the legal frameworks governing the establishment of foreign-invested enterprises for other construction related services.

In the past two decades, China has witnessed an unprecedented growth in terms of the number and the scale of construction, engineering and infrastructure projects. With an average 8.9% real gross domestic product (“GDP”) growth during the period 1998 to 2005,1 the PRC construction sector has been growing at a steady rate both in real terms and also in relation to other economic sectors. The construction sector’s share in GDP has risen from 6.7% in 1998 to 7% in 2004, and it is expected to reach 9% by 2010.2