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The Ministry of Construction, the Ministry of Foreign Trade and Economic Cooperation
Decree of the Ministry of Construction of the People’s Republic of China and the Ministry of Foreign Trade and Economic Cooperation
of the People’s Republic of China
No.113
This is to issue Regulations on Construction Enterprises with Foreign Investment, upon the approval of 63rd meeting of the standing
committee of the Ministry of Construction and the 10th working meeting of ministers of the Ministry of Foreign Trade and Economic
Cooperation, which takes effect on December 1, 2002.
Minister of Construction Wang Guangtao
Minister of Foreign Trade and Economic Cooperation Shi Guangsheng
September 27, 2002
Regulations on Construction Enterprises with Foreign Investment
Chapter I General Provisions
Article 1
The regulations are formulated according to the Construction Law of People’s Republic of China, Tendering Law of the People’s Republic
of China, Law of the People’s Republic of China on Chinese and Foreign Equity Joint Ventures, Law of the People’s Republic of China
on Chinese-Foreign Contractual Joint Ventures, Law of the People’s Republic of China on Foreign-Capital Enterprises, Regulations
on the Quality of Construction Projects and relevant laws and administrative regulations, for the purpose of opening wider to the
outside world and standardize management of Construction Enterprises with Foreign Investment.
Article 2
The regulations apply to the establishment of Construction Enterprises with Foreign Investment within China, the application for the
aptitude of construction enterprises and the supervision and management of Construction Enterprises with Foreign Investment. What
are called here as ” Construction Enterprises with Foreign Investment” refer to Construction Enterprises with Foreign Investment,
equity and contractual joint ventures of construction enterprises set up within China in accordance with Chinese laws and regulations.
Article 3
To establish Construction Enterprises with Foreign Investment within the People’s Republic of China and engage in construction activities,
a certificate of approval for foreign-invested enterprise should be obtained from competent administrative agencies for foreign trade
and economic activities with registration accomplished at the State Administration for Industry and Commerce or authorized local
industrial and commercial bureaus and an aptitude certificate for construction enterprise from competent construction department
is also needed.
Article 4
The laws, regulations and rules of the People’s Republic of China should be observed in any construction actions by Construction Enterprises
with Foreign Investment within China. The legal business activities and legitimate rights and interests of Construction Enterprises
with Foreign Investment within China are under the protection of laws, rules and regulations of the People’s Republic of China.
Article 5
Management of the establishment of Construction Enterprises with Foreign Investment is subject to the foreign trade and economic administrative
agencies under the State Council, and management of aptitude of Construction Enterprises with Foreign Investment is subject to the
competent construction department of the State Council. The foreign trade and economic administrative departments of provinces, autonomous
regions and municipalities directly under the Central Government take charge of the establishment of Construction Enterprises with
Foreign Investment within the mandate. While the construction departments of provinces, autonomous regions and municipalities directly
under the Central Government take charge of the aptitude management within their respective administrative region according to these
regulations.
Chapter II Examination and Approval of the Establishment and Aptitude of Enterprises
Article 6
The application for and approval of the establishment and aptitude of foreign-invested enterprise are subject to management by layer
and category. Application for a special class or class A in the general contract series of construction, or a class A in the specialized
contract series should be approved by the competent foreign trade and economy department of the State Council in terms of establishment
and by the competent construction department of the State Council in terms of qualification. Application for class B or lower level
or for a class in the labor sub-contracting series should be approved by the foreign trade and economic department of governments
of provinces, autonomous regions and municipalities directly under the Central Government in terms of establishment and by the construction
department of local government in terms of aptitude. When the Chinese investor of a joint venture or contractual construction enterprise
is under the management of the central government, its establishment and qualification are to be approved by competent foreign trade
and economic department and construction department of the State Council.
Article 7
Procedures of applications for launching of Construction Enterprises with Foreign Investment, aptitude of a special class or class
A in the general contract series of construction, or a class A in the specialized contract series:
I.
Application be submitted to the foreign trade and economic department of government of provinces, autonomous regions and municipalities
directly under the central government of the planned location for the enterprise.
II.
The foreign trade and economic department of the government of provinces, autonomous regions and municipalities directly under the
Central Government should complete preliminary examination in 30 days since the day of application acceptance and, upon approval,
submission should be made to the foreign trade and economic department of the State Council.
III.
The competent foreign trade and economic department of the State Council shall send within 10 days after the day of receipt of the
primarily examined materials the application materials to the competent construction department of the State Council to solicit opinions.
The construction department should offer a written opinion within 30 days from the receipt of the opinion-soliciting letter. The
competent foreign trade and economic department of the State Council shall make a written decision within 30 days after the receipt
of the written opinion on whether to grant a certificate of approval or, if not approve, give the reasons of refusal in written form.
IV.
Foreign-invested enterprises obtaining the approval certificate should register with the departments in charge within 30 days.
V.
The regulation on aptitude of construction enterprises shall apply in case of application for the aptitude of a construction enterprise
after the obtaining a business license for a corporate legal person.
Article 8
Application for the establishment of Construction Enterprises with Foreign Investment and class B or lower level in the general contract
series of construction, or a class in the labor sub-contracting series is subject to the foreign trade and economic department and
construction department of governments of provinces, autonomous regions and municipalities directly under the Central Government
by referring to Article 7 of the Regulations and Regulations on aptitude construction enterprises and considering local conditions.
The aptitude examined and approved by construction department of the governments of provinces, autonomous regions and municipalities
directly under the Central Government should be submitted to the construction department of the State Council for records.
Article 9
Concerned procedures should be undergone at the competent construction department if the aptitude of Construction Enterprises with
Foreign Investment is to be upgraded or aptitude other than the main item is to be added through application.
Article 10
The following materials should be submitted to the competent foreign trade and economic department in applying for the launching of
a construction enterprise with foreign investment:
I.
Application for the launching of Construction Enterprises with Foreign Investment signed by the legal representative of the investor;
II.
Feasibility report prepared or recognized by the investor;
III.
Contract and constitution of the Construction Enterprises with Foreign Investment signed by the legal representative of the investor.
(Constitution only needed in case of a construction enterprise with foreign investment to be set up);
IV.
An advanced notice of approval for the name of the enterprise;
V.
Certificate issued by the investor’s country or region for registration and certificate of banking credit of the enterprises engaging
in construction project design;
VI.
Documents of office responsibilities and evidences for chairman of the board of directors, board members, managers and engineering
technical manager to be appointed by the investor;
VII.
Balance sheet and income sheet of the investor for the latest three years which have been audited by a register accountant or an accounting
firm.
Article 11
The following materials should be submitted to the competent construction department in applying for an aptitude of a construction
enterprise with foreign investment:
I.
Application for aptitude of a construction enterprise with foreign investment;
II.
Certificate of approval for the foreign-invested enterprise;
III.
Business license of the corporate legal person;
IV.
Certificate of banking credit for the investor;
V.
Documents of office responsibilities and evidences for chairman of the board of directors, board members, managers and engineering
technical manager to be appointed by the investor;
VI.
Balance sheet and income sheet of the investor for the latest three years, which have been audited by a register accountant or an
accounting firm.
VII.
Materials required by Regulations on the Aptitude of Construction Enterprises.
Article 12
The investment of the Chinese investor of joint ventures and contractual construction enterprises should comprise at least 25% of
the register capital.
Article 13
The class of aptitude of the joint ventures and contractual construction enterprises that have been established before the implementation
of these regulations should be rechecked according to these regulations and the Regulations on the Aptitude of Construction Enterprises.
Article 14
The required materials should be in Chinese, and a Chinese version should be offered if the original is in a foreign language.
Chapter III Scope of Project Contracting
Article 15
Only the following kinds of projects are within the business scope of construction enterprises with foreign investment according to
their aptitude class:
I.
Projects built exclusively with foreign investment and foreign grant.
II.
Construction projects financed by international financial institutions or awarded by international bidding according to loan terms.
III.
Joint projects with 50% or more than 50% of foreign investment; or joint projects that, though with less than 50% of foreign investment,
can’t be independently implemented by Chinese construction enterprises due to technical difficulties, approved by the construction
department of governments of provinces, autonomous regions and municipalities.
IV.
Joint contracting is allowable, upon the approval of competent construction departments of governments of provinces, autonomous regions
and municipalities directly under the central government, for a domestic-invested project that is not able to be independently undertaken
by Chinese enterprises due to technical difficulties.
Article 16
Joint ventures and contractual construction enterprises should contract projects within the authorized scope corresponding to its
aptitude class.
Chapter IV Supervision and Administration
Article 17
The standards for construction enterprise aptitude issued by the construction department of the State Council shall apply to the aptitude
class of construction enterprises with foreign investment.
Article 18
As a general contractor of a project, the construction enterprise with foreign investment itself should undertake the construction
task of the major structure of the project.
Article 19
The aptitude class of the side with lower class shall be the basis for the permitted scope of contracting projects in case of a construction
enterprise with foreign investment co-contracting a project with other construction enterprises.
Article 20
A fine of above 2% to below 4% of the total contract price shall be imposed upon the construction enterprise with foreign investment
which contracts projects beyond the scope permitted by its aptitude in breach of Article 15 of the Regulations. A decree of business
suspension for rectification or a demotion of aptitude class is also possible; the aptitude certificate is to be revoked for a serious
case; any illegal income shall be confiscated.
Article 21
Punishment is to be made according to relevant laws, regulations and rules for any violation of the Construction Law of the People’s
Republic of China, Tendering Law of the People’s Republic of China, Regulations on the Quality of Construction Projects, and Regulations
on the Aptitude of Construction Enterprise.
Chapter V Supplementary Provisions
Article 22
A foreign enterprise which has obtained a Certificate of Aptitude for Foreign Enterprise Contracting Projects prior to the implementation
of these regulations is enpost_titled, while launching a construction enterprise with foreign investment, to apply for aptitude of a class
corresponding to its performance in contracting projects within the territory of the People’s Republic of China. The class of aptitude
of a new construction enterprise with foreign investment set up by a foreign enterprise that has already established a foreign-invested
enterprise within PRC shall be checked and ratified in compliance with Regulations on the Aptitude of Construction Enterprises.
Article 23
The regulations should be referred to in case of investors from HK, Macao and Taiwan setting up construction enterprises in other
provinces, autonomous regions and municipalities directly under the central government for construction activities, unless otherwise
provided in laws, regulations or stipulations of the State Council.
Article 24
The regulations are subject to the interpretation of the competent construction department and foreign trade and economic department
of the State Council according to their respective scope of responsibilities.
Article 25
The regulations enter into force as of December 1, 2002.
Article 26
The Interim Regulations on Foreign Enterprises Contracting Projects within PRC (Decree No. 32 of the Ministry of Construction) issued
by the Ministry of Construction on March 22 1994 are to be annulled from October 1, 2003.
Article 27
The Provisions on the Establishment of Construction Enterprises with Foreign Investment (JianJian [1995] No.533) co-issued by the
Ministry of Construction and the Ministry of Foreign Trade and Economic Cooperation is to be annulled from December 1, 2002.
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