LETTER OF REPLY OF THE MINISTRY OF FINANCE CONCERNING SOURCES FOR THE FOREIGN PARTIES IN CHINESE-FOREIGN CONTRACTUAL JOINT VENTURES TO RECOVER INVESTMENT AHEAD OF AGREED SCHEDULE

The Ministry of Finance

Letter of Reply of the Ministry of Finance Concerning Sources for the Foreign Parties in Chinese-foreign Contractual Joint Ventures
to Recover Investment ahead of Agreed Schedule

CaiGongZi [1993]No.393

October 12, 1993

Finance Bureau of Qingdao:

Your request numbered QingCaiWaiJing [1993] No.27 for Instruction on Sources for Foreign Parties in Chinese-foreign Cooperative Ventures
to Recover Investment ahead of Agreed Schedule was received. The official reply is hereby given as follows:

In accordance with Article 22 of the Law of the People’s Republic of China on Chinese-foreign Contractual Joint Ventures, if all
fixed assets of the contractual joint venture fall into the ownership of the Chinese party upon the end of contracted cooperation
period, the Chinese party and the foreign party may agree in the contract that the foreign party may recover its investment ahead
of the end of cooperation period. The main sources for the foreign party to recover its investment ahead of the contracted period
include funds generated from depreciation of fixed assets and amortization of intangible assets, and profits realized by the enterprise.
Investment recovery by foreign party in the form of accelerated depreciation is subject to the approval of finance and taxation authorities.
The normal operation of the contractual joint venture must be ensured when the foreign party recovers its investment ahead of agreed
schedule.