The Chinese legal system is a complex amalgam of custom and statute, largely criminal law; rudimentary civil code in effect since 1 January 1987; new legal codes in effect since 1 January 1980; continuing efforts are being made to improve civil, administrative, criminal, and in particular commercial law. The legal environment in China is not yet fully developed, this is documented by the yearly flood of new laws and continuous changes and amendments to existing laws.

Leasing is not yet specified in a separate law, however a special leasing law is now under preparation, which will set the frame-work for leasing buiness under legal, tax and accounting aspects.
Currently various laws and regulations are basis for conducting leasing business, such as:

–	Contract Law covering leasing business since 1999
–	Accounting rules for leasing business set up by MOF in January 2001, revised in February 2006
–	Property Law (Sachenrecht) in progress

Since March 2005 wholly foreign owned leasing companies can establish operations in China.

Terms which are current internationally, and increasingly also used in China, particularly in connection with new balance sheet accounting standards like IAS/IFRS and Chinese-GAAP, are "finance lease" and "operating lease." The first is roughly equivalent to full amortisation, the second to partial amortisation. Characteristic of operating leasing, however, is that it also involves very short agreement periods and the leasing company assumes the full risk from utilisation of the leased goods are returned after expiry of the agreement. However due to different tax treatment of operating lease, its is currently negligible, so that most leases are finance leases in China.

Even though Deutsche Leasing China can give broad overview-information on legal and accounting treatment of leasing business it is not qualified to give professional and valid advice of lawyers and accountants, Deutsche Leasing China, however can always assist you to introduce professional local lawyers and/or accountants, if needed.