Discuss how VIE structure works in China, how did the companies make use of VIE to work around the rules, what have the Chinese government done in response, e.g. imposing new rules and laws.

Many overseas-listed Chinese companies such as Alibaba and Baidu use the structure of variable interest entity to bypass foreign investment regulations. This essay will briefly discuss how VIE structure works in China, how did the companies make use of VIE to work around the rules, what have the Chinese government done in response, e.g. imposing new rules and laws. Predict the future development direction, whether it will decline or flourish? And conclude what further actions should the Chinese government do.