Construction law in Mainland China



Mainland China is one of the largest and most dynamic construction markets in the world. The ongoing economic growth of China, as well as events such as the Beijing 2008 Olympics, the Shanghai 2010 World Expo, the Western Development Strategy and National Housing Reform have been the drivers of a prolonged construction industry boom. This provides opportunities for foreign companies interested in China's construction industry.

Mainland China's legal system is a civil law system, rather than the common law system in Hong Kong.

China’s regulatory regime governing construction business is continuously evolving.

The Contract Law of the
PRC is relevant. Chapter 16, titled 'Contracts for construction projects', defines a construction contract. It also explains the requirements for tendering, contractual terms, supervision and inspection of the site and works, and available remedies.

On 1 March 1998 the 'Construction Law of the People's Republic of China' became effective. This law is made up of 85 Articles in 8 chapters. It deals with general matters, construction licensing, contracting, supervision of construction projects, management of safety and operation, and management of construction project quality.

The Ministry of Construction (MOC) plays a central role in the rationalisation and modernisation of China's construction sector and the regulation of foreign contractors in China. The MOC issued three significant documents in 2004:


(a)
a new draft Construction Law was issued on 27 August 2004 (Draft Law);

(b)
the Issues Relevant to the Proper Management of the Qualifications of Foreign-Invested Construction Enterprises Circular was issued jointly with the Ministry of Commerce on 6 September 2004 and took immediate effect; and

(c)
the Construction Project Management Trial Procedures, which were issued on 16 November 2004 and took effect on 1 December 2004.

These documents set out the regulatory framework for foreign contractors and companies operating in China's construction sector.

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