CIRCULAR OF THE STATE COUNCIL CONCERNING THE ANNULMENT OF THE SECOND BATCH OF REGULATIONS GOVERNING FOREIGN-RELATED MATTERS

Category	CATALOGUE OF INVALIDATED LAWS AND ADMINISTRATIVE REGULATIONS GOVERNING FOREIGN-RELATED MATTERS	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1988-09-27	Effective Date	1988-09-27

Circular of the State Council Concerning the Annulment of the Second Batch of Regulations Governing Foreign-related Matters

Annex I A CATALOGUE OF THE SECOND BATCH OF REGULATIONS GOVERNING
Annex II A CATALOGUE OF THE SECOND BATCH OF REGULATIONS GOVERNING

(September 27, 1988)

In order to speed up the implementation of the strategy for economic
development in the coastal areas, and to promote the development of
export-oriented economy in the coastal areas of our country, the departments
concerned under the State Council, in accordance with the planning and
requirements of the State Council for the sorting out of regulations governing
foreign-related matters, have undertaken the sorting out of the existing
administrative regulations as well as other legal documents (hereinafter
referred to as “the regulations”, for short), promulgated by the State Council
or promulgated with the approval of the State Council. At present, the second
batch of twelve regulations, which have been sorted out and should be
annulled, have been examined, piece by piece, by the Leading Group under
the State Council for the Sorting Out of Regulations jointly with the Bureau
of Legislative Affairs of the State Council and by the State Council; and it
is decided to announce the annulment of the aforesaid regulations (See Annex I
for the post_titles of the aforesaid regulations).

At the same time, the second batch of sixteen regulations, which have
become invalid automatically, have also been sorted out and examined, piece
by piece, by the Leading Group under the State Council for the Sorting Out of
Regulations jointly with the Bureau of Legislative Affairs of the State
Council; and now these sixteen invalid regulations (See Annex II for their
post_titles) are also included here as Annex II in order to help various regions
and departments concerned obtain an overall understanding of the condition of
those invalid regulations governing foreign-related matters, thereby
facilitating their work.

Annex I: A Catalogue of the Second Batch of Regulations Governing
Foreign-Related Matters Which Should be Annulled (12 pieces)

CIRCULAR OF THE STATE COUNCIL CONCERNING THE AUTHORIZATION OF THE PEOPLE’S GOVERNMENTS OF THE PROVINCES, AUTONOMOUS REGIONS, MUNICIPALITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT, SPECIAL ECONOMIC ZONES, AND MUNICIPALITIES SEPARATELY LISTED ON THE STATE PLAN TO EXAMINE AND APPROVE APPLICATIONS FOR THE ESTABLISHMENT OF ENTERPRISES WITH FOREIGN CAPITAL

Category	FOREIGN ECONOMIC RELATIONS AND TECHNOLOGICAL COOPERATION	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1988-09-09	Effective Date	1988-09-09

Circular of the State Council Concerning the Authorization of the People’s Governments of the Provinces, Autonomous Regions, Municipalities Directly under the Central Government, Special Economic Zones, and Municipalities Separately Listed on the State Plan to Examine and Approve Applications for the Establishment of Enterprises With Foreign Capital

(September 9, 1988)

In accordance with the provisions of Article 6 of The Law of the People’s
Republic of China on Foreign-Capital Enterprises, the State Council hereby
decides to authorize the people’s governments of the provinces, autonomous
regions, municipalities directly under the Central Government, special
economic zones, and municipalities separately listed on the State plan to
examine and approve, in accordance with the following provisions,
applications for the establishment of enterprises with foreign capital.

1. With respect to enterprises to be established with foreign capital,
whose investment volume is below the norm prescribed by the State Council,
and which do not require comprehensive balance to be carried out by the State
concerning construction conditions and production/operation conditions, the
application for the establishment of the aforesaid enterprises shall be
examined and approved by the people’s governments of the provinces,
autonomous regions, municipalities directly under the Central Government, the
special economic zones, or municipalities separately listed on the State
plan, and approval certificates shall be issued to the aforesaid enterprises.
However, if the products for domestic sales, manufactured by the enterprises
with foreign capital to be established, belong in the categories of products
the import of which is restricted by the State, or if their products for
export sales belong in the categories of products for which export licences
shall be issued by the Ministry of Foreign Economic Relations and Trade or by
the office of its accredited representative, or in the categories of products
subject to quota control by the State; or lines of business and projects in
which the utilization of foreign capital is restricted by the State, the
local authorities should obtain the consent of the Ministry of Foreign
Economic Relations and Trade or the competent authorities concerned before
they approve the application.

2. With respect to enterprises to be established with foreign capital,
whose investment volume is above the norm prescribed by the State Council, or
whose investment volume is below the norm but their construction and
production/operation conditions require comprehensive balance to be carried
out by the State, the peole’s governments of the provinces, autonomous
regions, municipalities directly under the Central Government, special
economic zones, or municipalities separately listed on the State plan shall
comment on the applications before they forward the same to the Ministry of
Econornic Relations and Trade for examination and approval and for the
issuance of approval certificates.

3. With respect to the enterprises with foreign capital to be established
which have been approved in accordance with the provisions of Article 1 of
this Circular, the examining and approving department shall, within thirty
days as of the date of approval, submit the applications for the
establishment of the said enterprises, together with the feasibility study
reports, the articles of association and the approval documents issued by the
examining and approving departments to the Ministry of Foreign Economic
Relations and Trade for the record. In the event that the Ministry of Foreign
Economic Relations and Trade, after receiving the said documents submitted
for the record, discovers that the enterprises whose establishment has
already been approved is not in conformity with the provisions of Article 1
of this Circular, the Ministry of Foreign Economic Relations and Trade shall
exercise its veto power. However, the local authorities concerned should be
notified of this veto within thirty days, beyond which the said veto shall
be invalidated.?

PREVENTION AND CONTROL OF ATMOSPHERIC POLLUTION

Law of the PRC on the Prevention and Control of Atmospheric Pollution

CHAPTER I GENERAL PROVISIONS

CHAPTER II SUPERVISION AND MANAGEMENT OF THE PREVENTION AND CONTROL OF ATMOSPHERIC POLLUTION

CHAPTER III PREVENTION AND CONTROL OF ATMOSPHERIC POLLUTION BY THE BURNING OF COAL

CHAPTER IV PREVENTION AND CONTROL OF POLLUTION BY WASTE GAS, DUST AND MALODOROUS SUBSTANCES

CHAPTER V LEGAL LIABILITY

CHAPTER VI SUPPLEMENTARY PROVISIONS

Article 1 This Law is formulated for the purpose of preventing and controlling atmospheric pollution, protecting and improving people’s
environment and the ecological environment, safeguarding human health, and promoting the development of socialist modernization.

Article 2 The State Council and the local people’s governments at various levels must incorporate the protection of the atmospheric
environment into the national economic and social development plans, make rational plans for the distribution of industry,
strengthen scientific research on the prevention and control of atmospheric pollution, adopt preventive and curative
measures against atmospheric pollution, and protect and improve the atmospheric environment.

Article 3 The environmental protection departments of the people’s governments at various levels shall be the organs conducting
unified supervision and management of the prevention and control of atmospheric pollution.

The administrative departments of public security, transportation, railways and fishery at various levels shall, by
performing their respective functions, conduct supervision and management of the atmospheric pollution caused by motorized
vehicles and vessels.

Article 4 Units that discharge atmospheric pollutants must comply with the relevant state provisions and take measures to prevent and
control pollution.

Article 5 All units and individuals shall have the obligation to protect the atmospheric environment and shall have the right to report
on or file charges against units or individuals that cause pollution to the atmospheric environment.

Article 6 The environmental protection department under the State Council shall establish the national standards for atmospheric
environment quality.

The people’s governments of provinces, autonomous regions and municipalities directly under the Central Government may
establish their local standards for items not specified in the national standards for atmospheric environment quality and
report the same to the environmental protection department under the State Council for the record.

Article 7 The environmental protection department under the State Council shall, in accordance with the national standards for atmospheric
environment quality and the country’s economic and technological conditions, establish the national standards for
the discharge of atmospheric pollutants.

The people’s governments of provinces, autonomous regions and municipalities directly under the Central Government may
establish their local discharge standards for items not specified in the national standards for the discharge of atmospheric
pollutants; with regard to items already specified in the national standards for the discharge of atmospheric pollutants,
they may set local discharge standards which are more stringent than the national discharge standards and report the same to
the environmental protection department under the State Council for the record.

Units that discharge atmospheric pollutants in areas where the local discharge standards have been established shall observe
such local standards.

Article 8 The State adopts economic and technological policies and measures to facilitate the prevention and control of atmospheric
pollution and comprehensive utilization.

Units or individuals that have made outstanding achievements in the prevention and control of atmospheric pollution or in the
protection and improvement of the atmospheric environment shall be rewarded by the people’s governments at various levels.

Article 9 The people’s governments at various levels shall redouble their efforts in afforestation and urban greening to improve
the atmospheric environment.

CHAPTER II SUPERVISION AND MANAGEMENT OF THE PREVENTION AND CONTROL OF

Article 10 New construction projects, extensions or reconstruction projects which discharge atmospheric pollutants shall be governed
by the State regulations concerning environmental protection for such projects.

The environmental impact statement on a construction project must assess the atmospheric pollution the project is likely to
produce and its impact on the ecosystem and stipulate the preventive and curative measures; the statement shall be
submitted, according to the specified procedure, to the environmental protection department concerned for examination and
approval.

When a construction project is to be put into operation or to use, its facilities for the prevention of atmospheric pollution
must be inspected by the environmental protection department; construction projects that do not fulfill the requirements
specified in the State regulations concerning environmental protection for such construction projects shall not be permitted
to be put into operation or to use.

Article 11 Units that discharge atmospheric pollutants must, pursuant to the provisions of the environmental protection department under
the State Council, report to the local environmental protection department its existing discharge and treatment facilities
for pollutants and the categories, quantities and concentrations of pollutants discharged under normal operation conditions
and submit to the same department the relevant technical data concerning the prevention and control of atmospheric
pollution.

Units shall report in time on any substantial change in the categories, quantities or concentrations of the pollutants discharged.
When pollutant treatment facilities are to be dismantled or left idle, permission from the local environmental protection
department must be obtained.

Article 12 If the discharge of pollutants by a unit exceeds the prescribed standards, it shall take effective measures to control
the pollution and pay a fee for excessive discharge according to State regulations. The fee thus levied must be used
for the prevention and control of pollution.

If an enterprise or institution causes severe atmospheric pollution, it shall be ordered to eliminate and control the pollution
within a certain period of time.

Article 13 Within the scenic or historic sites, nature reserves and other zones that need special protection, as designated by the
State Council and the people’s governments of provinces, autonomous regions and municipalities directly under the Central
Government, no industrial production installations that cause environmental pollution shall be built; other installations
to be built in these areas must not exceed the prescribed standards for pollutant discharge. Enterprises and institutions
which, before the enforcement of this Law, have built installations discharging more pollutants than are specified by
the prescribed discharge standards shall be ordered to eliminate and control such pollution within a certain period of time.

Article 14 For enterprises or institutions under the jurisdiction of a people’s government at or below the city or county level, a deadline
for the elimination or control of pollution shall be proposed by the environmental protection department of the people’s
government at the city or county level and shall be reported to the people’s government at the corresponding level for decision.
For enterprises and institutions directly under the jurisdiction of the Central Government or the people’s government
of a province, an autonomous region or a municipality directly under the Central Government, such a deadline shall
be proposed by the environmental protection department of the people’s government of a province, an autonomous region
or a municipality directly under the Central Government and shall be reported to the people’s government at the corresponding
level for decision.

Article 15 Enterprises shall give priority to the adoption of clean production techniques that are instrumental to high-efficient use
of energy and reduced discharge of pollutants so as to decrease the generation of atmospheric pollutants.

The State practises an elimination system for the backward production techniques and backward equipment which seriously
pollutes the atmospheric environment.

The competent department for comprehensive economic and trade affairs under the State Council shall, in conjunction with
other relevant departments under the State Council, publish a catalog of the techniques which seriously pollute the atmospheric
environment and the use of which shall be prohibited within a time limit, and a catalog of the equipment which seriously pollutes
the atmospheric environment and the production, sale, importation and use of which shall be prohibited within a time limit.

Producers, sellers, importers or users shall, within the time limit prescribed by the competent department for comprehensive
economic and trade affairs under the State Council in conjunction with the relevant departments under the State Council,
stop the production, sale, importation or use of the equipment listed in the catalog specified in the preceding paragraph.
People who use the production techniques listed in the catalog specified in the preceding paragraph shall, within the time
limit prescribed by the competent department for comprehensive economic affairs under the State Council in conjunction
with the relevant departments under the State Council, stop using such techniques.

The equipment eliminated in accordance with the provisions of the preceding two paragraphs may not be transferred to another
for use.

Article 16 Any unit that, as a result of an accident or any other exigency, discharges or leaks toxic or harmful gas or radioactive
substances, thereby causing or threatening to cause an accident of atmospheric pollution and jeopardize human health,
must promptly take emergency measures to prevent and control the atmospheric pollution hazards, make the situation known
to such units and inhabitants as are likely to be endangered by the atmospheric pollution hazards, report the case to the
local environmental protection department and accept its investigation and disposal.

Under the urgent circumstances of a severe atmospheric pollution that jeopardizes human health and safety, the local people’s
government must take compulsory emergency measures, including ordering the pollutant discharging units concerned to stop
the discharge of pollutants.

Article 17 The environmental protection departments and other supervisory and management departments shall be empowered to make onsite
inspections of units under their jurisdiction that discharge pollutants. The units being inspected must truthfully report the
situation to them and provide them with the necessary information. The inspecting authorities shall have the obligation
to keep confidential the technological know-how and business secrets of the units inspected.

Article 18 The environmental protection department under the State Council shall set up a monitoring system for atmospheric pollution,
organize a monitoring network and work out unified monitoring measures.

CHAPTER III PREVENTION AND CONTROL OF ATMOSPHERIC POLLUTION BY THE

Article 19 The competent department concerned under the State Council shall, pursuant to the standards for boiler soot discharge prescribed
by the State, stipulate corresponding requirements in the boiler quality standards; boilers that do not meet the prescribed
requirements shall not be permitted to be manufactured, sold or imported.

Article 20 The soot discharge of newly-built industrial kilns and newly- installed boilers shall not exceed the prescribed discharge standards.

Article 21 Urban construction shall be conducted on the basis of over- all planning, the unified provision of heat sources and the development
of central heating.

Article 22 The relevant departments under the State Council and the local people’s governments at various levels shall adopt measures
to improve the urban fuel structure, develop urban gas supply, and popularize the production and utilization of shaped
coal.

Article 23 When coal, gangue, coal cinder, coal ashes or lime is stored in densely inhabited areas, fire and dust prevention measures must
be taken in order to prevent atmospheric pollution.

Article 24 The State promotes the dressing of coal by washing to reduce the sulfur and ash in coal, and restricts the mining of high-sulfur
or high-ash coal. If the coal mined from a newly-built coal mine is of high-sulfur or high-ash, supporting facilities
for the dressing of coal by washing shall be installed to make the sulfur and ash in coal fall within the prescribed limits.

If the coal mined from an established coal mine is of high-sulfur or high-ash, supporting facilities for the dressing of
coal by washing shall be installed within a time limit in accordance with the plan approved by the State Council.

It is prohibited to mine the coal with toxic or harmful substances, such as radioactive and arsenic, that exceed the prescribed
limits.

Article 25 People’s governments of large or medium-sized cities shall make plans for people in the urban areas to use sulfur-fixed briquette
of coal as fuel or other clean fuel for cooking ranges, so as to gradually eliminate the direct use of raw coal as fuel.

Article 26 To establish a heat-engine plant within the urban areas of a city, both heating and electricity shall be generated where
it is necessary and conditions permit, and construction and acceptance for use of the network of pipelines for heat supply
shall be arranged in step with that of the main project of the plant.

Article 27 The environmental protection department under the State Council together with relevant departments under the State Council
may, in light of the meteorological, topographical, soil and other natural conditions, delimit the areas where acid rain
has occurred or will probably occur and areas that are seriously polluted by sulfur dioxide as acid rain control areas
and sulfur dioxide pollution control areas, subject to approval by the State Council.

With respect to the heat-engine plants and other large or medium-sized enterprises in the acid rain control areas or sulfur dioxide
pollution control areas that discharge sulfur dioxide, if they are newly-built construction projects which cannot use
low-sulfur coal, supporting facilities for desulphurization and dust removal must be installed or other measures for
control of the discharge of sulfur dioxide or for dust removal adopted; if they are established enterprises which do not
use low-sulfur coal, measures for control of discharge of sulfur dioxide or for dust removal shall be adopted. The State encourages
enterprises to adopt advanced technology for desulphurization and dust removal.

Enterprises shall gradually adopt measures to control the nitrogen oxide generated by the burning of coal.

CHAPTER IV PREVENTION AND CONTROL OF POLLUTION BY WASTE GAS, DUST AND

Article 28 The discharge of toxic waste gas and dust into the atmosphere shall be strictly restricted. When such discharge is really necessary,
the discharged gas or dust shall undergo purification treatment and shall not exceed the prescribed discharge standards.

Article 29 Inflammable gas engendered during industrial production shall be recovered for utilization; if such gas is discharged into
the atmosphere due to the absence of the means of recovery for utilization, it shall undergo treatment for the prevention and
control of pollution.

The discharge into the atmosphere of converter gas, acetylene, yellow phosphoric tail gas engendered by the electric furnace
process, and organic hydrocarbon tail gas must be reported to the local environmental protection department for approval.

When the discharge of inflammable gas is really necessary because of the malfunctioning of the recovery and re-use installations,
the inflammable gas discharged shall be fully burnt, or other measures shall be taken, to reduce atmospheric pollution.

Article 30 Units that discharge sulphide-bearing gas in the process of refining petroleum, producing synthetic ammonia or coal gas, cooking
fuel coal and smelting non-ferrous metal shall be equipped with desulphurizing installations or shall adopt other
measures for desulphurization.

Article 31 The discharge of gases and aerosols containing radioactive substances into the atmosphere must comply with state provisions
on radioactivity protection and must not exceed the prescribed discharge standards.

Article 32 Units that discharge malodorous gases into the atmosphere must take measures to prevent the pollution of neighboring residential
areas.

Article 33 Units that discharge dust into the atmosphere must adopt measures to remove such dust.

Article 34 The burning of asphalt, asphalt felt, rubber, plastics, leather and other materials that may produce toxic or harmful smoke
or dust or malodorous gases in densely inhabited areas shall be prohibited; when, under special circumstances,
such burning is really necessary, it must be reported to the local environmental protection department for approval.

Article 35 In the transportation, loading and unloading, and storage of substances that may diffuse toxic or harmful gases or dust, sealing
or other protective measures must be taken.

Article 36 Operators of the catering trade in urban areas must observe the regulations of the State Council on the administration
of environmental protection in relation to the catering trade, and adopt measures to prevent and control the pollution caused
by lampblack to the residential environment in the neighbourhood.

Article 37 Motorized vehicles and vessels shall not be permitted to discharge atmospheric pollutants in excess of the prescribed discharge
standards; measures shall be taken to deal with motorized vehicles and vessels that discharge atmospheric pollutants in
excess of the prescribed discharge standards. Automobiles that discharge pollutants in excess of the national discharge standards
shall not be permitted to be manufactured, sold or imported. Specific measures for supervision and management shall be formulated
by the State Council.

Article 38 The State encourages and supports the production and use of high-grade, unleaded gasoline and restricts the production and use
of leaded gasoline.

Relevant competent departments under the State Council shall make plans for gradually reducing the production of leaded gasoline
so as finally to stop the production and use of leaded gasoline.

Article 39 Any violator of this Law shall, according to the circumstances of the case, be warned or fined by the competent
environmental protection department or another supervisory and management department for any of the following acts:

(1) Refusing to report or submitting a false report on items for which registration is required by the environmental protection
department under the State Council for the discharge of pollutants.

(2) Dismantling or leaving idle the installations for the prevention and control of pollutants without prior approval by the
environmental protection department, or discharging pollutants in excess of the prescribed discharge standards.

(3) Refusing an on-site inspection by the competent environmental protection department or another supervisory and management
department, or resorting to trickery and fraud during inspection;

(4) Burning, in violation of Article 28 of this Law, asphalt, asphalt felt and other substances that produce toxic or harmful
smoke or dust or malodorous gases in densely inhabited areas; or

(5) Failing to pay, according to state provisions, the fee for excessive discharge of pollutants.

Article 40 Whoever, in violation of the provisions of Article 15 of this Law produces, sells, imports or uses the equipment that is prohibited
to produce, sell, import or use or employs the techniques that are prohibited to employ shall be ordered to make
rectification by the competent department for comprehensive economic and trade affairs of the people’s government at or above
the county level; if the circumstances are serious, the said competent department shall put forward suggestions thereon and
submit them to the people’s government at the corresponding level, which shall, according to the limits of authority prescribed
by the State Council, order the offender to suspend operation or close down.

Article 41 When a construction project is put into operation or to use in circumstances where its facilities for the prevention and control
of atmospheric pollution either have not been completed or fail to meet the requirements specified in the state provisions concerning
environmental protection for such a construction project, the environmental protection department responsible for the examination
and approval of the environmental impact statement on the construction project shall order the suspension of its operations
or use and may concurrently impose a fine.

Article 42 An enterprise or institution that has failed to eliminate or control pollution by the deadline as required shall, as provided
for by the State, pay a fee for excessive discharge; in addition, a fine may be imposed on it on the basis of the damages incurred,
or the enterprise or institution may be ordered to suspend its operations or close down.

The fine shall be decided by the competent environmental protection department. An order for the suspension of operations or
shut-down of an enterprise or institution shall be issued by the people’s government that set the deadline for the elimination
or control of pollution. An order for the suspension of operations or shut-down of an enterprise or institution directly
under the jurisdiction of the Central Government shall be submitted to and approved by the State Council.

Article 43 An enterprise or institution which causes an atmospheric pollution accident through violation of this Law shall be fined by
the competent environmental protection department on the basis of the damages incurred. In serious cases, the persons
responsible shall be subject to administrative sanctions by the unit to which they belong or by a higher competent authority.

Article 44 A party refusing to accept the decision on administrative sanction may bring a suit before a people’s court within 15 days
of receiving the notification on such a decision. If, upon the expiration of this period, the party has neither brought a
suit nor complied with the decision, the organ which imposed the sanction may apply to the people’s court for compulsory
enforcement.

Article 45 A unit that has caused an atmospheric pollution hazard shall have the responsibility of removing the hazard and of
making compensation to the units or individuals that have suffered direct losses.

A dispute over the liability to make compensation or the amount of compensation may, at the request of the parties, be
settled by an environmental protection department; if a party refuses to accept the decision, it may bring a suit before
a people’s court. The party may also bring a suit before the people’s court directly.

Article 46 If atmospheric pollution losses result directly from irresistible natural disasters which cannot be averted even
after reasonable measures have been promptly taken, the party concerned shall be exempted from liability.

Article 47 Should a serious atmospheric pollution accident occur that leads to any grave consequences of heavy public or private property
losses or serious personal injuries or deaths, the criminal liability of the persons responsible for such an accident may
be investigated by application of the provisions of Article 115 or Article 187 of the Criminal Law.

Article 48 Any supervisory and management person for environmental protection who commits abuse of power or neglect of duty shall
be subject to administrative sanction; if his act constitutes a crime, his criminal liability shall be investigated according
to law.

CHAPTER VI SUPPLEMENTARY PROVISIONS

Article 49 The environmental protection department under the State Council shall, in accordance with this Law, formulate rules for
its implementation, which shall be put into effect after being submitted to and approved by the State Council.

Article 50 This Law shall come into force as of June 1,1988.

LISTS OF I/E TARIFF RATE ADJUSTMENT BY THE STATE COUNCIL OF PEOPLE’S REPUBLIC OF CHINA

TRIAL MEASURES FOR CONTROL OF THE INSPECTION OF IMPORT AND EXPORT COMMODITIES OF ENTERPRISES WITH FOREIGN INVESTMENT AND TRADE VENTURES INVOLVING PROCESSING AND ASSEMBLY WITH SUPPLIED MATERIALS AND PARTS OR COMPENSATION TRADE

The State Administration for Import and Export Commodity Inspection

Trial Measures for Control of the Inspection of Import and Export Commodities of Enterprises with Foreign Investment and Trade Ventures
Involving Processing and Assembly with Supplied Materials and Parts or Compensation Trade

the State Administration for Import and Export Commodity Inspection

September 2, 1988

Article 1

These Measures are formulated to help implement State regulations on control of the inspection of import and export commodities, to
safeguard the legal rights and interests of the various parties involved in foreign trade and to promote the development of enterprises
with foreign investment and trade ventures involving processing and assembly with supplied materials and parts or compensation trade.

Article 2

These Measures shall apply to the import and export commodities of enterprises invested in and established in China by foreign companies,
enterprises, other economic entities or individuals (namely, foreign-capital enterprises, Chinese-foreign equity joint ventures and
Chinese-foreign contractual joint ventures) and trade ventures involving processing and assembly with supplied materials and parts
and compensation trade (namely, commission processing, processing with supplied designs and samples, assembly with supplied parts
and compensation trade).

Article 3

Goods imported by a wholly foreign-owned enterprise for its own use shall be inspected by the enterprises itself and notarial verification
may be undertaken by a commodity inspection organ on application by the enterprise.

Article 4

Imports of a Chinese-foreign equity joint venture or Chinese-foreign contractual joint venture which are included in the Current List
of Import-Export Commodities Subject to Inspection (hereinafter referred to as the List of Commodities) or the Local List of Commodities,
goods to be inspected by a commodity inspection organ pursuant to the stipulations of the foreign trade contract and goods involving
the areas of safety and public hygiene must be reported to a commodity inspection organ and the said organ shall inspect the goods
or undertake supervisory and control measures. Other imports shall be inspected by the enterprise itself or notarial verification
may be undertaken by a commodity inspection organ on application by the enterprise.

Article 5

Goods imported or produced by an enterprise with foreign investment which are to be sold in China shall be classified as being the
same as normal imports which must be declared or reported to a commodity inspection organ for inspection. The inspection organ shall
inspect the goods or undertake supervisory and control measures.

Article 6

Unless a foreign trade contract stipulates the need for an inspection by a commodity inspection organ, raw and auxiliary materials
and parts imported for commission processing or assembly shall be inspected by the enterprise itself or notarial verification may
be undertaken by a commodity inspection organ on application by the enterprise.

Goods imported as part of a compensation trade transaction shall be classified as being same as normal imports which must be declared
or reported to a commodity inspection organ for inspection. The inspection organ shall inspect the goods or undertake supervisory
and control measures.

Article 7

Exports of an enterprise with foreign investment or a commission processing or assembly venture which are included in the List of
Commodities or Local List of Commodities must be reported to a commodity inspection organ for inspection if a Chinese trade mark
or labeling made in China is used or the goods involve the areas of safety or public hygiene or an inspection by a commodity inspection
organ is stipulated in the provisions of the foreign trade contract. If neither a Chinese trade mark nor labeling made in China is
used on the goods, inspection by a commodity inspection organ need not be undertaken batch by batch. Other exports shall be inspected
by an enterprise itself or notarial verification may be undertaken by a commodity inspection organ on application by the enterprise.

Exports from a processing venture using supplied designs and samples on a compensation trade transaction shall be classified as being
the same as normal exports and thus subject to inspection or supervisory and control measures by a commodity inspection organ in
accordance with relevant regulations.

Article 8

If, when an enterprise with foreign investment is exporting goods included in the List of Commodities or the Local List of Commodities,
the buyer sends a representative to China to inspect the goods prior to acceptance in accordance with international practice, the
commodity inspection organ may issue a clearance certificate based on the results of the quality inspection conducted by the buyer’s
representative or the signed inspection report. If the foreign party revises the relevant provisions on quality in the contract or
letter of credit or acknowledges the actual quality of the goods, clearance of the goods may be issued after an inspection of the
contract or letter of credit revised by the foreign party or the cable of acknowledgement.

Article 9

Export food processing factories and warehouses of enterprises with foreign investment and commission processing enterprises shall
be administered in accordance with State regulations on hygiene registration procedures for export commodities.

Article 10

Export commodities of an enterprise with foreign investment, commission processing enterprise or supplied part assembly enterprise
which use a Chinese trade mark or labeling made in China shall be classified as goods subject to the export quality licensing system
and thus shall require handling in accordance with relevant State regulations on export commodity quality licensing.

Article 11

If the exports of an enterprise with foreign investment or a venture involving processing or assembly with supplied materials or parts
or compensation trade meet the requirements for issuance of the generalised system of preferences (GSP) certificate or certificate
of origin, the said certificates shall be issued uniformly by commodity inspection organs.

Article 12

An enterprise with foreign investment or a venture involving processing or assembly with supplied materials or parts or compensation
trade that imports or exports goods may, in accordance with its requirements for delivery and acceptance of goods, settlement of
accounts, fee calculations, financial settlements, customs clearance, tax calculations and damage claims and claim settlements, apply
to a commodity inspection organ or the China National Import and Export Commodity Inspection Corporation, authorised by the State
Administration of Import and Export Commodity Inspection, or its local branch offices for inspection and authentication of goods
and the issue of relevant inspection verification certificates.

Article 13

When importing or exporting goods, if an enterprise with foreign investment or a venture involving processing or assembly with supplied
materials or parts or compensation trade, applies to a commodity inspection organ for an inspection or notarial verification of goods
or to undertake procedures for hygiene registration or the issue of a quality licence, the commodity inspection organ shall, without
exception, offer priority handling of such matters.

Article 14

The Special Economic Zone may formulate separate control measures in accordance with relevant policies, to be submitted to the State
Administration of Import and Export Commodity Inspection for examination and approval.

Article 15

These Measures shall enter into force as of the date of promulgation. The State Administration for Import and Export Commodity Inspection
shall retain the right of interpretation.

The State Administration for Import and Export Commodity Inspection
1988-09-02

INTERIM REGULATIONS OF THE BEIJING MUNICIPALITY CONCERNING THE EXPERIMENTAL AREA FOR DEVELOPING NEW-TECHNOLOGY INDUSTRIES

Category	SCIENCE AND TECHNOLOGY	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1988-05-20	Effective Date	1988-05-20

Interim Regulations of the Beijing Municipality Concerning the Experimental Area for Developing New-technology Industries

(Approved by the State Council of the People’s Republic of China on May

10, 1988 and promulgated by the People’s Government of the Beijing
Municipality on May 20, 1988)

Article 1 These Regulations are formulated for the purpose of
facilitating the direct integration of science and technology with production
and the optimal combination of science and technology with other production
factors, promoting technical and economic development and supporting the
establishment of an experimental area for developing new-technology industries.

Article 2 An area of approximately 100 square kilometres with the
Zhonggancun Area as its centre shall be delineated in the Haidian District of
the Beijing Municipality for the establishment of an export-oriented, open
experimental area for developing new-technology industries (hereinafter
referred to as the “experimental area”).

The limits of the experimental area shall be planned and delineated by the
People’s Government of the Beijing Municipality.

Article 3 These Regulations shall apply to technology-intensive and
intelligence-intensive economic entities that are engaged in the research,
development, production and management of one or many types of their new
technologies and the products thereof.

The scope of new technologies and the products thereof shall be separately
prescribed by the People’s Government of the Beijing Municipality in
accordance with the catalogues drawn up by the State Science and Technology
Commission.

The proportional standards of the technical income, research and
development expenditure and output value of new products of new-technology
enterprises shall be formulated by the People’s Government of the Beijing
Muncipality in consultation with the State Science and Technology Commission.

Article 4 The new-technology enterprises in the experimental area shall,
after confirmation by the departments designated by the People’s Government of
the Beijing Municipality, register with the administrative department for
industry and commerce in accordance with the pertinent provisions of the State.

Article 5 With respect to the new-technology enterprises in the
experimental area, the following preferential treatment in the form of
reduction of, and exemption from, taxes shall be effected:

(1) income tax shall be levied at a reduced rate of 15 percent. With
respect to an enterprise whose output value of export products amounts to over
40 percent of the total output value of the same year, income tax shall, upon
verification by the tax department, be levied at a reduced rate of 10 percent.

(2) a new-technology enterprise shall be exempted from income tax in the
first three years following its inauguration and shall, upon approval by a
department designated by the People’s Government of the Beijing Municipality,
be allowed a 50 percent reduction on the basis of the income tax rates
prescribed in paragraph 1 of this Article in the fourth through sixth years.

(3) a new-technology enterprise may, upon approval by the People’s
Government of the Beijing Municipality, be exempted from buying the bonds for
key construction projects issued by the State.

(5) houses of a productive and business nature built for technological
development with self-raised funds shall be exempted from building tax in the
five years beginning from 1988.

The above-mentioned preferential treatment in the form of reduction of,
and exemption from, taxes shall be applicable to the enterprises with foreign
investment established in the experimental area that measure up to the
standards of a new-technology enterprise.

Article 6 The capital consruction projects of the new-technology
enterprises in the experimental area that are of a productive and business
nature shall be arranged for construction in accordance with the unified
planning. They shall not be incorporated into the scale of fixed assets
investment. Procedures for examination and approval shall be simplified and
priority shall be given to their construction.

Article 7 No import licence shall be required for imported raw materials
and parts and components that are needed for the production of export products
by a new-technology enterprise in the experimental area and the Customs shall
inspect and grant clearance on the strength of the contract and the document
of approval issued by the department designated by the People’s Government of
the Beijing Municipality. Bonded warehouses and bonded factories may, upon
approval by the Customs, be built in the experimental area and the Customs
shall exercise supervision and control over the imported raw materials and
parts and components in the same way as it deals with imported materials for
processing. The Customs shall, based on the actual processed and exported
quantities, grant exemption from import duties and product tax on the link of
import or value added tax. Export products shall be exempted from export
duties. Bonded goods that are to be shifted to the domestic market shall be
subject to the approval of the original examining and approving department and
the permission of the Customs and the taxes thereon shall be levied in
accordance with the relevant regulations. With respect to products the import
of which is restricted by the State or which are controlled by the State
import licencing system, the procedures shall be made up for to obtain the
document of approval for import or an import licence in accordance with the
pertinent provisions of the State.

If a new-technology enterprise is to import instruments and equipment for
the development of new technology because China is not capable of producing
them, they shall, on the strength of the document of approval issued by the
examining and approving department and upon verification by the Customs, be
exempted from import duties for the next five years.

The Customs may establish an agency or station a supervising group in the
experimental area.

Article 8 The money resulting from the exemption from, or reduction of,
taxes shall be placed on the State Supporting Fund and be used by the
enterprises exclusively for the development of new technology and production
and may not be used for collective welfare or for distribution among the
workers and staff.

Article 9 The banks shall support the new-technology enterprises in the
experimental areas by means of providing loans and shall allocate every year a
certain amount from the repaid loans for technological transformation to be
used for the development of new technology. Export-oriented new-technology
enterprises shall be granted the priority of being provided with loans in
foreign exchange.

The banks shall, for three years following the day on which these
Regulations go into effect, appropriate every year a certain amount of
special loans to be used exclusively for the development and construction
(including capital construction) of the new-technology enterprises in the
experimental area. This special fund shall be for the exclusive use mentioned
above and the banks shall control the turnover in its use. The banks shall
arrange every year for the experimental area to issue a certain amount of
long-term bonds to raise funds from society to support the development of new
technology.

A new-technology enterprise may, upon approval by the tax department,
repay the loans it has used before tax. If the loans are to be used for
capital construction, they shall not be restricted by such provisions as
having to be deposited for half a year and longer before they are used.

The banks in the experimental area may draw a certain proportion from
their interest income and found a loan risk fund. Chinese-foreign joint risk
investment companies may be established in the experimental area.

Article 10 New-technology products import and export companies shall be
established in the experimental area. New-technology enterprises that possess
the necessary conditions shall be granted the right to foreign trade business
operations by the People’s Government of the Beijing Municipality and
undertake export plans, assuming full responsibility for their own profits and
losses. They may, upon approval by the State departments concerned, establish
branch offices abroad. The foreign exchange earned by a new-technology
enterprise shall be retained entirely by the enterprise for the first three
years and shall, from the fourth year on, be divided between the local
authorities and the foreign exchange earning enterprise, with 20 percent going
to the former and 80 percent retained by the latter.

Article 11 With respect to new-technology enterprises in the experimental
area that have relatively many economic and technical exchanges with foreign
countries or relatively much products export business, if their commercial and
technical personnel have to go abroad many times in a year, their first visit
abroad shall be examined and approved by the People’s Government of the
Beijing Municipality and the later ones shall be examined and approved by the
respective enterprises themselves.

Article 12 Instruments and equipment that are used by a new-technology
enterprise in the experimental area for the development of new technology and
the products thereof may be granted fast depreciation.

Article 13 New-technology enterprises in the experimental area may fix
trial sale prices for the new products developed by themselves. If they handle
the new-technology products that have not been unifiedly priced by the State,
they may fix the prices for these products themselves.

Article 14 Technical personnel working in scientific research
institutions, schools and enterprises are encouraged to do part-time jobs in
the new-technology enterprises in the experimental area, or launch, lead the
running of or contract various kinds of new-technology enterprises, or leave
their jobs to take up positions in the new-technology enterprises. The
departments concerned shall give them active support, provide convenience and
protect their legitimate rights and interests.

New-technology enterprises shall be permitted to recruit graduating junior
college students, graduating university students, postgraduates, returned
students and foreign experts.

Article 15 New-technology enterprises in the experimental area shall be
exempted from bonus tax. If the personal income of a person employed in such
an enterprise reaches the standard where the regulatory tax for personal
income shall be payable, a tax shall be levied in accordance with the relevant
regulations.

Article 16 With respect to the various taxes paid by the new-technology
enterprises in the experimental area, the whole amount that has been increased
on top of the taxes paid in 1987, which are used as the radix, shall for five
years be returned to the Haidian District. This amount shall be used for the
development and construction of the experimental area and its use shall be
supervised by the municipal financial and tax departments.

Article 17 The People’s Government of the Beijing Municipality may
formulate procedures of implementation and specific implementing provisions in
accordance with these Regulations.

Article 18 These Regulations shall go into effect on the date of
promulgation.

PROVISIONAL REGULATIONS ON PRIVATE ENTERPRISES

Provisional Regalations of the PRC on Private Enterprises

(Promulgated 25 June 1988 by the State Council)

CONTENTS

CHAPTER I GENERAL PRINCIPLES

CHAPTER II TYPES OF PRIVATE ENTERPRISES

CHAPTER III ESTABLISHMENT AND DISSOLUTION OF A PRIVATE ENTERPRISE

CHAPTER IV RIGHTS AND OBLIGATIONS OF A PRIVATE ENTERPRISE

CHAPTER V PRIVATE ENTERPRISE LABOUR MANAGEMENT

CHAPTER VI PRIVATE ENTERPRISE FINANCE AND TAXATION MATTERS

CHAPTER VII SUPERVISION AND PENALTY PROVISIONS

CHAPTER VIII SUPPLEMENTARY PRINCIPLES

CHAPTER I GENERAL PRINCIPLES

Article 1. These Regulations are formulated to encourage and guide the healthy development of private enterprises, to safeguard their
legal rights and interests, to tighten supervision and control and to enhance the prosperity of socialism’s
planned commodity economy.

Article 2. For the purpose of these Regulations, the term “private enterprise” shall refer to a privately funded economic entity which
employs at least eight persons.

Article 3. The private economy shall be seen as a complement to the socialist publicly owned economy. The State shall protect the
legal rights and interests of private enterprises.

A private enterprise shall operate within the scope stipulated by State laws, statutory regulations and policies.

Article 4. The employees of a private enterprise may organise a trade union in accordance with the law. The legal rights and
interests of employees shall receive the protection of State laws.

Article 5. Private enterprises may establish a private enterprise association.

CHAPTER II TYPES OF PRIVATE ENTERPRISES

Article 6. A private enterprise may be:

(1) a sole investment enterprise;

(2) a partnership enterprise; or

(3) a limited liability company.

Article 7. A sole investment enterprise refers to an enterprise which is funded and managed by one person.

The owner of a sole investment enterprise shall assume unlimited liability for the obligations of the enterprise.

Article 8. A partnership enterprise refers to an enterprise which is jointly funded and managed by two or more persons who assume
joint responsibility for its profit and losses.

A partnership enterprise shall be based on a written agreement.

The partners shall bear several and unlimited liability for the obligations of the enterprise.

Article 9. A limited liability company refers to an enterprise in which an investor is liable for company obligations only to the
amount of its investment contribution and the company is liable for company obligations only to the amount of its total assets.

A limited liability company shall meet the following requirements;

(1) The name of the company shall include the words “limited liability company” or “limited company”.

(2) Its articles of association shall comply with the provisions of these Regulations.

(3) There shall be at least two, but no more than 30 investors.

(4) It shall obtain a document of verification certifying the amount of its registered capital.

(5) An investor wishing to transfer his equity contribution shall obtain the consent of the other investors. The
consent of at least half the investors is required if there are more than three investors.

(6) The amount of registered capital may not be reduced.

(7) Shares in the company may not be sold to the public.

A limited liability company with more than 30 investors shall only be permitted to complete registration formalities
after the approval of its special application by the administration for industry and commerce.

Article 10. A limited liability company shall obtain the status of a legal person in accordance with the law.

CHAPTER III ESTABLISHMENT AND DISSOLUTION OF A PRIVATE ENTERPRISE

Article 11. The following persons may apply to establish a private enterprise:

(1) villagers;

(2) persons awaiting employment in cities and towns;

(3) operators of individual industrial and commercial undertakings;

(4) persons who have resigned or were dismissed from their posts;

(5) retired cadres, retired workers and other persons authorised under State laws, statutory regulations and policies.

Article 12. A private enterprise may engage in production and business operations, within the scope prescribed by State laws,,
statutory regulations and policies, in such fields as industry, construction, transportation, commerce, catering,
the service industry, the repair trade and scientific and technological consultancy.

A private enterprise shall not be permitted to engage in production and business operations related to the
war industry or finance and shall not be permitted to produce or deal in products prohibited by the State.

Article 13. A unit applying to establish a private enterprise shall fulfil the following conditions;

(1) have funds and personnel of an amount and number which are in proportion with the scale of its production
operations and services;

(2) have a fixed place of business and the necessary facilities;

(3) have a scope of business which complies with the provisions of State laws, statutory regulations and policies.

Article 14. The articles of association of a limited liability company shall include the following items;

(1) name and domicile of the company;

(2) purpose of the company and scope of business;

(3) amount of registered capital and the equity contributions of the various investors;

(4) name, address, rights and obligations of the various investors;

(5) organisational structure of the company;

(6) conditions for dissolution of the company;

(7) conditions for the transfer of the equity share of an investor;

(8) profit distribution and loss sharing methods;

(9) procedures for the amendment of the articles of association;

(10) other items which require provisions.

Article 15. When establishing a private enterprise, business operations may commence only after the relevant documents are submitted
to the local administration for industry and commerce for registration and the issue of a business licence, subject
to verification and approval of the application documents.

Article 16. Registration of an amendment or re-registration, due to the division, merger, transfer, change of business premises or change
of scope of business of an enterprise, shall be conducted with the Administration for Industry and Commerce.

Article 17. A private enterprise wishing to close down its operations shall apply to the Administration for Industry and Commerce
30 days before closure and shall complete procedures for the cancellation of registration, subject to verification and approval
of the application.

When closing down, a private enterprise shall take stock of its property and repay its debts.

Article 18. Detailed measures on liquidation and the repayment of debts in the case of a private enterprise which is bankrupt, shall be
formulated separately.

Article 19. A private enterprise which fulfils the requirements for registration as a legal person shall undertake procedures
for the registration of the commencement of its business operations, registration of amendments and cancellation
of registration, as appropriate, in accordance with the provisions of the Administrative Regulations of the
People’s Republic of China governing the Registration of Corporations.

CHAPTER IV RIGHTS AND OBLIGATIONS OF A PRIVATE ENTERPRISE

Article 20. Investors in a private enterprise shall hold legal post_title to its property and such property may be inherited in accordance with
the law.

Article 21. Within the area of its production and business activities a private enterprise shall be enpost_titled to the following rights;

(1) the proprietary right of use of its approved and registered name within the prescribed scope of use;

(2) the right of autonomy of operations within the approved and registered scope;

(3) the right to decide its organisational structure and the employment or dismissal of its personnel;

(4) the right to decide its wage system and method of profit distribution;

(5) the right to fix price and fee standards for its products in accordance with State provisions on price control;

(6) the right to conclude contracts;

(7) the right to apply for patent and trademark registration.

Article 22. a private enterprise may, in accordance with the provisions of State laws and statutory regulations, establish a Sino-foreign
joint equity enterprise or Sino-foreign co-operative enterprise with a foreign company, enterprise, other economic
entity or individual, or engage in commission processing, sample processing, commission assembling or compensation
trade.

Article 23. Within the area of its production and business activities a private enterprise shall bear the following obligations;

(1) the obligation to abide by State laws, statutory regulations and policies;

(2) the obligation to pay tax in accordance with the law;

(3) the obligation to accept supervision and control by relevant State organs.

Article 24. A private enterprise shall establish a bank account with a bank or other financial institution in accordance with relevant
State regulations and may lodge a loan application if able to meet the prescribed requirements.

Article 25. Except if State laws or statutory regulations stipulate otherwise, no unit shall be permitted to use any method
to require a private enterprise to provide it with financial resources, material resources or manpower.
In the event of an attempt to apportion the resources of a private enterprise, the private enterprise shall
have the right of refusal and the Administration for Industry and Commerce shall have the right to halt any attempt at apportionment.

Article 26. Except if confiscated or revoked by an administration for industry and commerce in accordance with legal procedure,
the Corporate Business Licence or Business Licence of a private enterprise may not be confiscated or revoked.

CHAPTER V PRIVATE ENTERPRISE LABOUR MANAGEMENT

Article 27. The recruitment of personnel by a private enterprise shall be based on a written labour contract which shall define the
rights and obligations of both parties, in accordance with the principles of equality, voluntary participation and
unanimity through consultation.

The labour contract of a private enterprise shall be filed with the local labour management organ.

Article 28. A labour contract shall include the following items:

(1) quality and quantity requirements as regards the work of personnel;

(2) duration of the contract term;

(3) working conditions;

(4) labour remuneration, insurance and welfare benefits;

(5) labour discipline;

(6) liabilities in the event of a breach of the labour contract;

(7) other items agreed on by the relevant parties.

Article 29 If a labour dispute arises within a private enterprise, the matter shall be handled with reference to the Provisional
Regulations for the Handling of Labour Disputes in State-run Enterprises.

Article 30. A private enterprise shall implement the relevant State provisions on labour protection, formulate necessary rules and
regulations, provide labour safety and hygiene facilities and safeguard the safety and health of its personnel.

A private enterprise shall take out insurance with an insurance company on behalf of those of its personnel who engage
in an industry or type of work which affects their health and safety.

A private enterprise shall, where possible, take out social insurance for its personnel.

Article 31. A private enterprise shall implement the eight hour workday system.

Article 32. A private enterprise may not employ child labour under the age of sixteen.

Article 33. A private enterprise trade union shall have the right to sign a collective contract with the enterprise in its role
as employee representative. It shall protect the legal rights and interests of employees in accordance with
the law and shall support the production and business activities of the enterprise.

CHAPTER VI PRIVATE ENTERPRISE FINANCE AND TAXATION MATTERS

Article 34. A private enterprise shall register with its local tax organ within 30 days of being issued with a Corporate Business
Licence or Business Licence.

Article 35. A private enterprise shall, in accordance with State finance and accounting legislation and tax organ provisions,
establish a complete financial and accounting system, employ finance and accounting personnel, establish books
of account, prepare and submit financial statements, conscientiously fulfil tax obligations and accept supervision
and inspection by tax organs.

Article 36. The salary of the head (general manager or chairman of the board of directors) of a private enterprise may be set at an
amount not exceeding ten times the average wage of the personnel of the enterprise.

Article 37. Private enterprise income tax shall be levied in accordance with the Provisional Regulations of the People’s Republic
of China on Private Enterprise Income Tax and other relevant regulations.

Article 38. A private enterprise shall allocate no less than 50% of its after-tax profit as a production development fund. If, due
to special circumstances, the proposed amount for allocation is less than 50%, the approval of the tax organ is required.

The production development fund of a private enterprise may be used in the expanded reproduction of the enterprise
itself, or as investment in another enterprise or to repay a loan or cover enterprise losses. The approval of
the tax organ is required if the fund is used for any other purpose.

Article 39. The income received by a private enterprise investor from wages and the distribution of after-tax profit shall
be subject to individual income adjustment tax in accordance with the law.

CHAPTER VII SUPERVISION AND PENALTY PROVISIONS

Article 40. The administration for industry and commerce shall strengthen its administration and supervision of private enterprises,
protect legal business operations and investigate and deal with illegal business activities.

The various departments in charge of related trades and industries shall guide, assist and administer the production
and business activities of private enterprises.

Article 41. The administration for industry and commerce shall, depending on the circumstances, issue a warning, impose a fine, confiscate
illegal income, order the suspension of operations until the matter is rectified or cancel the Business Licence
of a private enterprise if it is involved in any of the following acts:

(1) withholding the truth or practising fraud as regards a registration application or unlawfully commencing business
operations without completing examination, approval and registration procedures;

(2) engaging in business activities beyond the approved and registered scope of business of failing to undertake
procedures for registering an amendment, re-registering or cancelling registration in accordance with regulations;

(3) forging, altering, leasing, transferring, selling or reproducing, without authorisation, a Business Licence;

(4) engaging in other illegal activities.

If a private enterprise with legal person status violates provisions on registration administration, the matter
shall be handled in accordance with the provisions of the Administrative Regulations of the People’s Republic of China
governing the Registration of Corporations.

Article 42. A labour management organ shall, depending on the circumstances, issue a private enterprise with a warning or impose
a fine if the enterprise is involved in any of the following acts:

(1) engaging in production or business activities which do not comply with State provisions on labour protection;

(2) using child labour;

(3) violating the legal rights and interests of its personnel.

Article 43. If a private enterprise violates the provisions of Article 38 of these Regulations, the tax organ shall issue a warning
or impose a fine, depending on the circumstances.

Article 44. A private enterprise which disagrees with the penalty decision of an administrative organ issued in accordance
with the provisions of Article 41 or Article 42 of these Regulations may apply to the penalty issuing organ
at a higher level within 15 days of receiving notice of the decision for a review of the case. The higher level organ
shall make its decision within 30 days of receiving the review application. An applicant who disagrees with the review
decision may lodge an appeal with the people’s court within 30 days of receiving notice of the review decision.

The penalty decision shall come into force if the enterprise fails to apply for a review of fails to lodge an appeal within
the prescribed time limit.

Article 45. If a private enterprise violates a State law or statutory regulation involving an area such as taxation, resources, industrial
and commercial administration, prices, finance, measurements, quality, hygiene or environment protection, the relevant
organ shall deal with the matter in accordance with the law.

Article 46. If personnel of an administrative organ violate the provisions of these Regulations through abuse of their powers
of office, involvement in favouritism or malpractice, acceptance of bribes or infringement of the legal
rights and interests of a private enterprise, the relevant organ in charge shall impose an administrative penalty
or a monetary fine, depending on the circumstances. Criminal liability shall be pursued if there has been a violation of
criminal law.

CHAPTER VIII SUPPLEMENTARY PRINCIPLES

Article 47. The State Administration or Industry and Commerce shall be responsible for the interpretation of these Regulations and shall
formulate implementing measures in conjunction with the relevant departments.

Article 48. These Regulations shall take effect from 1 July 1988.

Source:MOFTEC

MEASURES FOR THE IMPLEMENTATION OF THE IMPORT COMMODITY QUALITY LICENSING SYSTEM

CIRCULAR OF THE GENERAL OFFICE OF THE STATE COUNCIL ON THE APPROVAL AND TRANSMISSION OF THE PROPOSALS SUBMITTED BY THE MINISTRY OF LABOUR AND THE MINISTRY OF PERSONNEL CONCERNING FURTHER IMPLEMENTATION OF THE POLICY OF GRANTING DECISION-MAKING POWER TO ENTERPRISES WITH FOREIGN INVESTMENT FOR THE EMPLOYMENT OF WORKING PERSONNEL

Category	LABOUR ADMINISTRATION	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1988-05-05	Effective Date	1988-05-05

Circular of the General Office of the State Council on the Approval and Transmission of the Proposals Submitted by the Ministry of Labour and the Ministry of Personnel Concerning Further Implementation of the Policy of Granting Decision-making Power to Enterprises With Foreign Investment for the Employment of Working Personnel

The Circular
PROPOSALS OF THE MINISTRY OF LABOUR AND THE MINISTRY OF PERSONNEL

(May 5, 1988)

The Circular

The report enpost_titled “Proposals Concerning Further Implementation of the
Policy of Granting Decision-Making Power to Enterprises with Foreign
Investment for the Employment of Working Personnel” submitted by the Ministry
of Labour and the Ministry of Personnel has been approved by the State
Council. The Report is hereby transmitted to you for earnest implementation.
PROPOSALS OF THE MINISTRY OF LABOUR AND THE MINISTRY OF PERSONNEL
CONCERNING FURTHER IMPLEMENTATION OF THE POLICY OF GRANTING DECISION-MAKING
POWER TO ENTERPRISES WITH FOREIGN INVESTMENT FOR THE EMPLOYMENT OF WORKING
PERSONNEL(Excerpts)

In order to improve the investment environment to facilitate the
implementation of the strategy for the economic development in the coastal
areas, the following proposals are hereby made on further implementaion of the
policy of granting decision-making power to enterprises with foreign
investment for the employment of working personnel:

(1) Workers, technical personnel and administrative personnel (including
senior administrative personnel) needed by enterprises with foreign investment
may be employed by the enterprises openly from society; the enterprises may
also select and employ their working personnel from among the personnel
recommended by the Chinese joint venturers, their business partners. If the
personnel employed from the local area cannot satisfy the needs of the
enterprises, working personnel may be employed trans-regionally.

(2) In case that enterprises with foreign investment wish to employ
working personnel from among workers and staff members on job, the departments
and units concerned should give their active support and permit their working
personnel to leave. The aforesaid departments and units should not impose any
restrictions by charging payments or by taking back rooms or houses. In case
that the original unit attempts to obstruct without any justification, workers
or staff members who are employed by the aforesaid enterprises may resign.
After resignation, their years of service shall still be counted without
interruption. If any disputes arise, the person concerned may apply to the
labour dispute arbitration committee in the local area, or to the service
center for the exchange of personnel authorized by the local government for
arbitration. All parties concerned must execute the arbitral award. If
necessary, the transfer formalities may be performed on behalf of the engaged
workers and staff members directly by the local labour or personnel
departments.

(3) In case that enterprises with foreign investment go beyond the
province, autonomous region, or municipality directly under the Central
Government to employ workers and staff members, it is no longer necessary for
them to submit their applications to the provincial department of labour or
personnel for approval; the labour or personnel departments of the areas
concerned should strive to do their organizational, coordinative and service
work well.

(4) When a Chinese enterprise establishes a joint venture with foreign
businessmen, the joint venture may select and employ the workers and staff
members of the original Chinese enterprise according to needs. The Chinese
side of the joint venture and the competent authorities over the joint venture
shall make proper arrangements for the placement of those workers and staff
members who are not employed; and the local government shall take an active
part in assisting the department concerned to do the personnel regulation work.

(5) In the case that an enterprise with foreign investment dismisses
workers and staff members in accordance with the contract and relevant
provisions, no departments, units or individuals shall interfere. Of the
dismissed workers and staff members, those who were on loan or temporarily
employed shall be reaccepted by their original unit of work and those who were
directly hired by the joint venture shall register for a new job with the
local labour service company or the service center for the exchange of
personnel at their original place or be offered a new post through the
introduction of a department concerned, or organize themselves for
self-employment, or look for a job themselves.

(6) The Chinese personnel, who hold the position of chairman of the board
of directors or directors in a Chinese-foreign equity joint venture or in a
Chinese-foreign contractual joint venture, shall not be transferred during
their terms of office without authorization. If the transfer is necessary, the
appointing unit shall solicit the opinions of the examining and approving
organ of the said enterprise and of the foreign side of the joint venture.
No departments and units have the right to transfer senior Chinese
administrative personnel employed by an enterprise with foreign investment,
during their terms of office as stipulated in the contract, to other positions
without the consent of the said enterprise’s board of directors and of the
general manager.

(7) If there is any conflict between these Proposals and the pertinent
regulations and provisions promulgated by the State Council and The former
Ministry of Labour and Personnel, these Proposals shall prevail.

(8) Various areas and departments concerned should strengthen publicity
and education among the leading cadres at various levels and the broad masses
of workers and staff members for their better understanding of the matter and
ensure that enterprises with foreign investment can exercise their
decision-making power in selecting and employing working personnel in
accordance with the practice prevalent in the world. Those who violate the
pertinent laws and regulations and these Proposals, and use dishonest methods
or devious means in handling cases concerning the employment or dismissal of
workers and staff members, shall be criticized and admonished. If the cases
are serious, investigations shall be conducted into the legal responsibilities
of the persons concerned or disciplinary sanctions shall be given to them, in
accordance with the actual circumstances.

PROVISIONS OF THE STATE COUNCIL CONCERNING THE ENCOURAGEMENT OF INVESTMENT IN DEVELOPING HAINAN ISLAND

Category	SPECIAL ECONOMIC ZONES AND COASTAL ECONOMIC DEVELOPMENT ZONES	Organ of Promulgation	The State Council	Status of Effect	In Force
Date of Promulgation	1988-05-04	Effective Date	1988-05-04

Provisions of the State Council Concerning the Encouragement of Investment in Developing Hainan Island

(Promulgated on May 4, 1988)

Article 1 These Provisions are formulated with a view to absorbing
investment from within and without so as to accelerate the development and
construction of Hainan Island.

Atticle 2 The State implements more flexible open economic policies for
Hainan Special Economic Zone and endows the People’s Government of Hainan
Province with greater decision-making power.

Article 3 The State encourages enterprises, other economic organizations
or individuals at home and from abroad (hereinafter referred to as investors)
to invest in the development of Hainan Island and establish various economic
and social undertakings.

Article 4 The State shall protect investors’ legitimate rights and
interests according to law, and shall not nationalize or requisition the
assets of the investors. Under special circumstances, where public interests
call for action, the State may resort to requisitioning in accordance with
legal procedures and due compensation shall be made.

Investors shall abide by China’s laws and regulations.

Article 5 Investors may make investment and conduct operations on Hainan
Island in the following forms:

(1) making investment in establishing equity joint ventures,
Chinese-foreign contractual joint ventures, foreign-capital enterprises
(hereinafter referred to as enterprises with foreign investment) as well as
other kinds of enterprises permitted by law. The period of operation for any
kind of enterprise shall be specified in the contract by the parties of
investment through consultation or approved by the relevant competent
authorities;

(2) purchasing shares, bonds and other negotiable securities;

(3) operating enterprises through purchasing, holding shares, contracting
or leasing;

(4) investing and operating in the investment modes obtaining throughout
the world, conducting economic and technological cooperation and exchanges.

Article 6 The use of State-owned land on Hainan Island shall be
non-gratuitous.

The People’s Government of Hainan Province may, according to law, grant
non gratuitously the right to the use of the State-owned land to investors.
The duration of right granted to land-use shall be laid down in the contract
in accordance with the specific conditions of different industries and
projects, with a maximum duration of 70 years; where there is the need to
continue using the land after the expiry of the contract, the duration may
be extended upon approval.

Investors may, in keeping with the relevant provisions of the State,
transfer non-gratuitously the right granted to land-use.

Article 7 Mineral resources on Hainan Island shall be exploited with
compensation according to law. The exploitation of some mineral resources
specifically designated by the State shall be subject to approval by the
relevant competent authorities of the State; the exploitation of other
mineral resources shall be subject to approval by the People’s Government of
Hainan Province. Investors are allowed to explore and develop the mineral
resources by setting up equity joint ventures, contractual joint ventures, or
foreign-capital enterprises.

Article 8 Investors may, in the form of an equity or contractual joint
ventures, invest in the construction of infrastructure on Hainan Island such
as ports, wharves, airports, highways, railways, power stations, coal mines
and water conservancy projects or may also engage in facilities with
exclusive investment. They may also invest in various business and service
enterprises related to the above-mentioned facilities in accordance with the
relevant regulations of the State to undertake comprehensive operations.

Article 9 Foreign-capital banks, banks with joint Chinese and foreign
investment or other financial institutions may be set up on Hainan Island
with the approval of the People’s Bank of China in light of the needs of
economic development.

Article 10 The investment in the establishment of various economic and
social undertakings on Hainan Island shall be subject to examination and
approval by the People’s Government of Hainan Province. Where the investment
scope and total amount exceed the authorization by the State, the investment
shall be submitted for examination and approval according to the procedures
laid down by the State.

Article 11 The importation of building materials, production and
managerial equipment as investment of an enterprise whose establishment has
already been approved, the importation of raw materials, accessories and
parts, packaging materials and other materials and items required for
production and operation, and the importation of means of transport and
office equipment for enterprise’s own use, are to be examined and approved
by the People’s Government of Hainan Province itself.

Article 12 The enterprise income tax shall be levied at a rate of 15
percent on the income derived from production, operation and other sources by
enterprises established on Hainan Island (State banks and insurance companies
excepted). In addition, a local surtax of 10 percent of the assessed income
tax shall be levied. Among the above-said enterprises:

(1) those engaged in the construction and operation of infrastructures
such as ports, wharves, airports, highways, railways, power stations, coal
mines and water conservancy projects etc., and those involved in agricultural
development, with an operation period of 15 years or longer, shall enjoy
a five-year income tax exemption beginning from the first profit-making year,
and shall be granted a 50 percent reduction in income tax from the sixth to
the tenth year;

(2) those engaged in industrial, communications and transportation and
other production enterprises with an operation period of 10 years or longer,
shall enjoy a two-year income tax exemption starting from the first
profit-making year and shall then be granted a tax reduction by one half from
the third to the fifth year; those acknowledged by the People’s Government of
Hainan Province as technologically advanced shall further enjoy a tax
reduction by one half from the sixth to the eighth year;

(3) after the expiration of the stipulated period for the reduction of or
exemption from enterprise income tax according to the State, enterprises
engaged in industry, agriculture, and other production businesses, shall have
their enterprise income tax reduced to 10 percent in the year when the value
of their export products amounts to 70 percent or more of their output value
of that year;

(4) those involved in service trades, with a total investment of or over
US$ 5 million or RMB 20 million yuan and an operation period of 10 years or
longer, shall be exempt from enterprise income tax in the first profit-making
year and enjoy a 50 percent reduction in income tax in the next two years.

Reduction of or exemption from local income tax for enterprises within
Hainan Island shall be determined by the People’s Government of Hainan
Province.

Article 13 For investors from outside China who have no offices on
Hainan Island, a 10 percent income tax shall be levied on their dividends,
interests, rents, franchise, royalties and other incomes derived from the
island except those exempt from income tax according to law. The People’s
Government of Hainan Province shall decide as to who are to enjoy income
tax reduction or exemption.

Article 14 Enterprises with foreign investment and enterprises with 25
percent of their shares held by foreign businessmen shall enjoy the right to
conduct import and export operations, and other enterprises may enjoy the
same right, if so approved by the People’s Government of Hainan
Province – i.e. to import the goods necessary for the production and
operations of their enterprises, and export their own products.

Article 15 Customs duty, product tax and value-added tax shall be
exempted on the machinery and equipment, raw materials and parts, means
of transport and other materials and items as well as office equipment that
the enterprises within Hainan Island need to import for their own production
and operations.

Customs duty, product tax or value-added tax shall be reduced by one half
on the goods imported for sale on the market in Hainan by enterprises on the
island.

Article 16 The State encourages enterprises on Hainan Island to export
their manufactured products. Products manufactured by enterprises to be
exported shall be exempt from export duties, and product tax or value-added
tax already collected thereon shall be reimbursed, except for crude and
refined oil, as well as a few other products specifically designated by the
State.

Article 17 The products manufactured by enterprises on Hainan Island and
to be marketed in Hainan are exempt from product tax or value-added tax,
whereas mineral oil, tobacco, liquor and a few other products specially
designated by the People’s Government of Hainan Province are subject to a 50
percent product tax or value-added tax. Where the manufactured products
contain certain imported parts and materials, customs duty, product tax or
value-added tax shall be exempted or levied retroactively in accordance with
the stipulations of Article 15.

Products manufactured by the aforesaid enterprises and to be marketed to
other parts in China, may be sold by enterprise themselves, except for
products whose importation is restricted by the State and which are subject
to approval in accordance with the relevant regulations of the State. But
product tax or value-added tax shall be levied on these products according
to relevant provisions. Customs duties, product tax or value-added tax on
the manufactured products containing imported parts and materials shall be
levied retroactively in accordance with relevant stipulations.

Where the enterprises with foreign investment within Hainan Island are to
sell on the domestic market their products which conform to the standards
specified in the methods governing import substitution by the State, they may
apply to sell their products as import substitutes.

Article l8 Foreign exchange earnings derived by enterprises within
Hainan Island from their product export and from other business activities,
may be retained in foreign currency as earned and shall be handled in keeping
with the regulations of the local People’s Bank of China.

The enterprises may adjust the surplus and deficits of their foreign
exchange and effect a balance of foreign exchange receipts and disbursements
at the foreign exchange adjustment markets located on Hainan Island or in
other parts of China.

Article 19 Investors from abroad may freely remit from the enterprise’s
foreign exchange deposit account at the bank the profits they earn from the
enterprises they set up on Hainan Island. The amount remitted shall be exempt
from income tax.

Investors from abroad who reinvest the profit they earn from their
enterprises within the Island, for a period of not less than five years shall
enjoy a reimbursement of 40 percent of the income tax paid on the amount to
be reinvested, and 100 percent of the income tax already paid on the amount
to be reinvested shall be reimbursed if the investors elect to reinvest their
profit earnings in the construction of infrastructure and agricultural
development enterprises, export-oriented and technologically – advanced
enterprises within the Island.

Investors from other parts of China shall be free to remit their profit
earnings from the enterprises on the Island. And no retroactive income tax
shall be levied on the profit earnings remitted to other parts of China
within ten years beginning from the first profit-making year.

Article 20 When coming to Hainan island to negotiate investment or trade,
promote economic and technological exchange, visit relatives or to tour,
foreigners from countries or regions having diplomatic relations or official
trade links with China, may apply for entry visas at the port of Haikou or
Sanya if their stay in Hainan does not exceed 15 days; those who need to stay
in Hainan longer or who want to go on to other parts of China on justifiable
grounds, may apply for an extension of visa or obtaining an additional visa
endorsement according to relevant provisions.

Foreigners who permanently live on Hainan Island, or who invest in the
establishment of local enterprises or participate in the development of the
island, and their accompanying family members may upon application be granted
multiple entry visas by the authorities concerned under the People’s
Government of Hainan Province.

Article 21 Compatriots from Hong Kong, Macao and Taiwan as well as
overseas Chinese holding valid passports or documents issued by the competent
authorities under the State Council or by their authorized agencies may come
to Hainan Island or proceed to other places within China without visas.
Compatriots from Taiwan may, at the ports in Hainan Island, directly apply for
Travel Certificate for Compatriots from Taiwan.

The People’s Government of Hainan Province is authorized to examine and
approve the dispatch abroad of personnel by domestic organizations in Hainan
Province that are to set up economic, trade or tourism offices or to
establish enterprises abroad, except otherwise provided by the State.

Article 22 Matters not covered in these Provisions may be handled by the
People’s Government of Hainan Province according to the provisions concerning
special economic zones.

The rules for the implementation of these Provisions shall be formulated
by competent departments under the State Council in conjunction with the
People’s Government of Hainan Province.

Article 23 These Provisions shall enter into force as of the date of
promulgation.?

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1994

REGULATIONS GOVERNING MANAGEMENT OF HIGHWAYS IN THE PRC

REGULATIONS FOR THE MANAGEMENT OF FOUNDATIONS

CIRCULAR OF THE STATE COUNCIL CONCERNING THE ANNULMENT OF THE SECOND BATCH OF REGULATIONS GOVERNING FOREIGN-RELATED MATTERS

PREVENTION AND CONTROL OF ATMOSPHERIC POLLUTION

LISTS OF I/E TARIFF RATE ADJUSTMENT BY THE STATE COUNCIL OF PEOPLE’S REPUBLIC OF CHINA

TRIAL MEASURES FOR CONTROL OF THE INSPECTION OF IMPORT AND EXPORT COMMODITIES OF ENTERPRISES WITH FOREIGN INVESTMENT AND TRADE VENTURES INVOLVING PROCESSING AND ASSEMBLY WITH SUPPLIED MATERIALS AND PARTS OR COMPENSATION TRADE

INTERIM REGULATIONS OF THE BEIJING MUNICIPALITY CONCERNING THE EXPERIMENTAL AREA FOR DEVELOPING NEW-TECHNOLOGY INDUSTRIES

PROVISIONAL REGULATIONS ON PRIVATE ENTERPRISES

MEASURES FOR THE IMPLEMENTATION OF THE IMPORT COMMODITY QUALITY LICENSING SYSTEM

PROVISIONS OF THE STATE COUNCIL CONCERNING THE ENCOURAGEMENT OF INVESTMENT IN DEVELOPING HAINAN ISLAND

CONSTITUTION ACT, 1982 – page 22

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

CONSTITUTION ACT, 1982 – page 17

CONSTITUTION ACT, 1982 – page 16

CONSTITUTION ACT, 1982 – page 12

CONSTITUTION ACT, 1982 – page 11

CONSTITUTION ACT, 1982 – page 10

CONSTITUTION ACT, 1982 – page 9

CONSTITUTION ACT, 1982 – page 8

CONSTITUTION ACT, 1982 – page 7