New merger and acquisition rules that took effect Friday target foreign investors and Chinese companies incorporated overseas, the Wall Street Journal reported. Regulators said the new rules aim to "promote and regulate foreign investment in China". Experts said they may also help cut down on recorded inflows from companies set up overseas by Chinese investors that fuel inflation and hinder efforts to curb rapid investment growth. Chinese investors sometimes set up companies overseas to take advantage of tax benefits, but such companies may account for up to one third of foreign direct investment, the newspaper reported, quoting a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce.
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