The Future of Chinese Variable Interest Entity Structure: Do Recent Policies Have Positive or Negative Effects on It?

Variable interest entity (VIE) is a solution to China's tight foreign investment policy. At the beginning of reform and open-up in China, the VIE structure brought domestic companies opportunities to have more financial support, and it made investing in Chinese companies an easy thing for U.S. investors. However, both the domestic company and U.S. investors have taken risks with the VIE structure. Recently U.S. and China introduced some policies to deal with the problems. Those policies might threaten the VIE structure’s survival but also provide other safer and more efficient options to Chinese companies and U.S. investors.