Despite what you might remember from the movies, the real China Syndrome is of a geo-political nature. As much buzz as the country gets as a magnet for foreign capital, investing in that inscrutable region of the world can be an exercise in frustration. Issues were made no easier last year when the government, interested in curbing foreign investment, applied a new set of regulations for offshore players, creating a whole new set of hoops to jump through. Spunky lot that they are, investors rose to the new challenges, says Mitch Dudek, and the legal firm of which he is a partner–New York City-based Paul, Hastings, Janofsky & Walker–is busier than ever advising clients on Chinese investments. Dudek, who is based in Shanghai, sat down with on Feb. 28–the day after the Chinese stock market took its dive–and discussed life post-restrictions and the outlook for 2008. Post 2006 restrictions, what is the landscape for foreign investment there?

Dudek: China is trying to get a hold of itself. Prior to the new restrictions, it was possible to own real estate from offshore. That meant that there was really no approval process other than the mere transfer of land. At that stage the real estate bureau really had no capacity to consider the standing of who is buying, and foreign investors could skirt the rules by which almost every industry has to play. The new rules take that away and allow the government to know who is investing where and how much, and it gives them the opportunity to say no.

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