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CIRCULAR OF THE GENERAL OFFICE OF THE MINISTRY OF FOREIGN TRADE AND ECONOMIC COOPERATION ON ISSUES CONCERNING THE JOINT ANNUAL INSPECTION ON ENTERPRISES WITH FOREIGN INVESTMENT EXAMINED AND APPROVED BY THE RELEVANT MINISTRIES AND COMMISSIONS OF THE STATE COUNCIL

The General Office of the Ministry of Foreign Trade and Economic Cooperation

Circular of the General Office of the Ministry of Foreign Trade and Economic Cooperation on Issues Concerning the Joint Annual Inspection
on Enterprises with Foreign Investment Examined and Approved by the Relevant Ministries and Commissions of the State Council

WaiJingMaoZiZi [1997] No.5

March 6, 1997

Commissions (departments, bureaus) of foreign trade and economic cooperation in all provinces, autonomous regions, municipalities
directly under the Central Government and municipalities separately listed on the State plan, Shengyang, Changchun, Harbin, Xi’an,
Chengdu, Nanjing, Wuhan, and Guangzhou, Wuhan and Shenzhen Foreign Investment Offices:

In line with the Circular on Joint Annual Inspection on Enterprises with Foreign Investment (WaiJingMaoZiFa [1996] No.773) issued
by Seven Departments of the State Council, for the purpose of facilitating the joint annual inspection on enterprises with foreign
investment approved by the departments of the State Council and established in different places, after consulting the National Foreign
Investment Steering Committee and the relevant ministries and commissions of the State Council, the relevant issues are hereby circularized
as follows:

I.

The joint annual inspection shall cover all enterprises with foreign investment examined and approved by the ministries and commissions
of the State Council, institutions directly under the State Council ,state bureaus under the administration of relevant ministries
and commissions of the State Council, China Aviation Industry Corporation, China Aerospace Industry Corporation, China Shipbuilding
Industry Corporation, China Weapon Industry Corporation, China Nuclear Industry Corporation, China Petrol-Chemical Industry Corporation,
China Non-ferrous Metal Industry Corporation and China General Logistics Department based on the company location principle. In
the joint annual inspection, the appropriate authority in charge of foreign investment examination and approval covering the area
where the enterprise locates inspects items that should be done by the foreign trade department.

II.

Please notify the enterprises concerned of the above requirements, inform other departments in the joint annual inspection and actively
coordinate with them to make the join annual inspection successful.



 
The General Office of the Ministry of Foreign Trade and Economic Cooperation
1997-03-06

 






PROVISIONAL REGULATIONS ON MANAGEMENT OF OPEN MARKET BUSINESS AND PRIMARY DEALERS

Provisional Regulations on Management of Open Market Business and Primary Dealers

     (Effective Date 1997.04.12)

CHAPTER I GENERAL PROVISIONS

CHAPTER II TRADING IN SECURITIES

CHAPTER III QUALIFICATIONS OF PRIMARY DEALERS AND VERIFICATIONS OF

THESE QUALIFICATIONS

CHAPTER IV RIGHTS AND OBLIGATIONS OF PRIMARY DEALERS

CHAPTER V ALTERATION AND TERMINATION OF THE QUALIFICATION OF

PRIMARY DEALERS

CHAPTER VI RULES ON PUNISHMENT

CHAPTER VII SUPPLEMENTARY ARTICLES

   Article 1 These Regulations have been formulated with a view to ensuring the smooth development of the open market business, safeguarding
the legitimate rights and interests of dealing parties, and promoting the steady development of China’s monetary market.

   Article 2 The open market business referred to in these Regulations means the activity of open buying and selling securities conducted
by the People’s Bank of China in order to attain the objective for its monetary policy.

   Article 3 Primary dealers in the open market business (hereinafter referred to as primary dealers) referred to in these Regulations
mean commercial banks, securities companies, and trust and investment companies which have been examined and designated
by the People’s Bank of China, and which are qualified for doing securities deals directly with the People’s Bank of China.

   Article 4 The People’s Bank of China shall take charge of examining and approving matters concerning the determination of, change
in or cancellation of the qualification of primary dealers.

   Article 5 The Open Market Business Operational Office (hereinafter referred to as the Operational Office) of the People’s Bank of
China shall take charge of the routine work of the open market business.

   Article 6 The categories of securities for trading refer to policy- oriented financial securities, fund-raising securities of the central
bank, national debts and other kinds of securities designated by the People’s Bank of China.

   Article 7 The categories of securities for trading shall include purchase, sale and counterpurchase.

   Article 8 In trading securities with the People’s Bank of China, primary dealers shall sign relevant agreements with the latter.

   Article 9 There shall be seven different time limits for counterpurchase i.e., 7 days, 14 days, 21 days, 28 days, 2 months, 3 months
and 4 months.

   Article 10 Securities trading shall normally be conducted by inviting bids, including bidding in terms of the amount and bidding in terms
of interest rates (or price bidding). Specific principles on winning bids shall be formulated by the Operational Office.

   Article 11 The liquidation of funds for securities trading shall be handled in accordance with the procedures for accounting examination
and calculation formulated by the relevant departments of the People’s Bank of China.

   Article 12 Securities registration, trust and transaction shall all be conducted with the Central National Debt Registration Settlement Co
Ltd and shall be handled in accordance with the regulations formulated by the company.

CHAPTER III QUALIFICATIONS OF PRIMARY DEALERS AND VERIFICATIONS OF THESE

   Article 13 Those applying to become primary dealers shall meet the following qualifications:

1. Commercial banks, securities companies and trust and investment companies which have been established as an independent
legal person with approval from the People’s Bank of China.

2. Abiding by state laws and decrees concerning economic affairs and finance, as well as provisions formulated by the
People’s Bank of China regarding the management of the ratio of assets to debts.

3. The registered capital of an urban cooperative bank, a securities company and a trust and investment company shall not be
less than 200 million yuan (including the amount of Renminbi converted from their foreign exchange capital).

4. The volume of securities trading by a securities company and a trust and investment company shall constitute a considerable
market share, have a relatively large agency business and qualified professionals, operate assets of fairly high quality,
be capable of making big profits, and have a perfect international managerial mechanism.

5. Having the ability and being willing to perform various obligations as specified by Article 4 of these Regulations; and

6. Other conditions prescribed by the People’s Bank of China.

   Article 14 Institutions that have been qualified as “independent primary dealers of national debts of the People’s Republic of China”
shall enjoy priority in becoming primary dealers.

   Article 15 Any agency that meets the conditions as listed in Article 13 of these Regulations may file an application for becoming a
primary dealer to the People’s Bank of China, send in an application form for the qualification for primary dealers in the
open market business, and submit the following materials:

1. A brief introduction of itself.

2. Business license (duplicate).

3. Duplicates of year-end balance sheets that have been audited by certified public accountant firm.

4. The specific department that will participate in the open market business and the composition of its staff; and

5. Other relevant data whose submission is required by the People’s Bank of China.

   Article 16 Any agency that has become a primary dealer following examination and approval shall be issued a “certificate of qualification
for primary dealers in the open market business” by the People’s Bank of China, with its name being made public.

CHAPTER IV RIGHTS AND OBLIGATIONS OF PRIMARY DEALERS

   Article 17 Primary dealers shall enjoy the following rights:

1. Direct securities trading with the People’s Bank of China.

2. Priority in obtaining information on the open market business released by the People’s Bank of China, as well as
relevant data provided by the Operational Office.

3. Conveniences and services provided by the People’s Bank of China and relevant securities registration and settlement departments
in such areas as the opening of bank accounts, fund liquidation, securities trust and settlement, and technical support.

4. Taking part in activities including joint meetings of primary dealers held regularly by the People’s Bank of China, exchanges,
symposiums and training of staff.

5. Participation in discussion of rules and systems of the People’s Bank of China concerning the open market business.

6. Mutual trading of policy financial bonds and fund accommodation funds of the central bank in line with relevant stipulations
of the People’s Bank of China.

7. Other rights granted by law.

   Article 18 Primary dealers shall have the following obligations:

1. Active participation in securities trading. Those that do not participate in trading or bidding or offer quotations
in a trading day as stipulated by the Operational Office shall promptly explain its reasons and relevant background.

2. Fulfilment of the trading tasks assigned by the People’s Bank of China in times of special needs for macro-economic controls
so as to timely pass around intensions of monetary policies. The People’s Bank of China shall give due consideration to the
interests of primary dealers when assigning mandatory trading tasks.

3. Conduction of honest trading with the People’s Bank of China and offering of reasonable market quotations.

4. Supply of information concerning the fund position, the possession of securities and trading on the secondary securities market,
as well as other relevant data.

5. Regular supply of market information and market analytical data to the Operational Office, and timely report of major incidents.
And

6. Strict performance of other obligations as specified in relevant provisions on the management of the open market business.

CHAPTER V ALTERATION AND TERMINATION OF THE QUALIFICATION OF PRIMARY

   Article 19 The People’s Bank of China shall make annual examination of the qualification of primary dealers. Such examination shall
mainly cover the following aspects:

1. Participation in the open market business.

2. Performance in the securities business in a year.

3. Changes in assets and debts as well as losses and profits in a year.

4. Observation of stipulations in these Regulations and other regulations on the management of the open market business;
and

5. Other aspects that call for examination.

The People’s Bank of China shall announce the result of these examinations.

   Article 20 Primary dealers that change their names or merge with others shall go through qualification alteration procedures with the People’s
Bank of China.

   Article 21 Those that voluntarily give up their qualification for primary dealers shall go through corresponding procedures with
the People’s Bank of China and shall not, within two years, apply to become primary dealers again.

   Article 22 Those that fail to fulfil the trading tasks assigned by the People’s Bank of China shall have their qualification as primary dealers
suspended for one year.

   Article 23 Those that involve in serious cases of collaborate manipulating of prices in securities trading shall have
their qualifications as primary dealers revoked by the the People’s Bank of China and banned from applying for becoming primary
dealers once again for two years.

   Article 24 Those that commit other acts in violation of laws and regulations shall be dealt with in accordance with relevant laws
and regulations. Moreover, the People’s Bank of China shall, depending on the seriousness of their cases, suspend their qualification
for primary dealers for one year or revoke their qualification for primary dealers.

   Article 25 The People’s Bank of China shall publish the names of those primary dealers whose qualifications have been suspended or cancelled.

   Article 26 Those whose qualification for primary dealers have been suspended or revoked shall cease to enjoy various rights granted
by relevant provisions on the open market business, but shall continue to perform the obligations that they have not performed.

   Article 27 The qualifications and corresponding rights of those primary dealers whose business licenses have been revoked
by departments in charge of them shall terminate automatically.

   Article 28 Those failing to submitted materials to higher authorities in accordance with provisions or providing fraudulent materials shall
be given a warning.

   Article 29 Those that fail to strike deals or offer quotations for three successive trading days in a year without reporting to
higher authorities shall be criticized in the form of a circular.

   Article 30 Those that violate other provisions concerning the open market business shall be dealt with in accordance with relevant
provisions. Moreover, the People’s Bank of China shall, depending on the seriousness of their cases, impose upon them fines
ranging from 5,000 yuan to 30,000 yuan.

CHAPTER VII SUPPLEMENTARY ARTICLES

   Article 31 The People’s Bank of China shall interpret and revise these Regulations.

   Article 32 These Regulations shall take force on the date of promulgation.

    





CIRCULAR OF THE STATE COUNCIL CONCERNING MEASURES FOR TAX EXEMPTION,OFFSET AND REFUND OF EXPORT GOODS MANAGED BY PRODUCTION ENTERPRISES OR AGENCIES BY AGREEMENT

Category  CUSTOMS Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1997-02-25 Effective Date  1997-02-25  


Circular of the State Council Concerning Measures for Tax “Exemption,Offset and Refund” of Export Goods Managed by Production Enterprises
or Agencies by Agreement



(February 25, 1997)

    To further invigorate the state-owned large- and medium-size enterprises,
expand foreign trade and export and push ahead the agency system, the State
Council hereby decides on the measures for tax “exemption, offset and refund”
of export goods managed by production enterprises authorized to engage in
import-export operations or entrusted to foreign trade enterprises as
agencies. The relevant questions are notified as follows:

    1.Range for tax “exemption, offset and refund”. Export goods managed by
all categories of production enterprises with import-export operational rights
or entrusted to foreign trade enterprises as agencies, unless otherwise
provided for, shall all implement the measures for tax “exemption, offset
and refund”.

    Implementation of measures for tax exemption for export goods by
enterprises with foreign business investment the establishment of which was
approved before December 31, 1993 shall continue up to December 31, 1998.
Measures for tax “exemption, offset and refund” shall likewise be carried
out on expiry.

    2.”Exemption” of tax in measures for tax “exemption, offset and refund”
means goods the export of which managed by production enterprises or entrusted
to foreign trade enterprises as agencies shall be exempted from the valued
added tax in the marketing link of the production enterprises;”offset” of tax means goods the export of which managed by production
enterprises or
entrusted to foreign trade enterprises as agencies shall be exempted from
or refunded of the tax payment already made for raw materials, parts and
components offsetting the payable tax payment of goods marketed domestically;
“refund” of tax means goods the export of which managed by production
enterprises or entrusted to foreign trade enterprises as agencies account
for more than 50% of the total sales of goods of the enterprises in the
corresponding period, the amount of tax which should be offset is greater
than the payable taxation and has not been completely offset in one
quarter, the portion of tax amount which has not been completely offset
shall be refunded upon approval by the competent tax office for export
refund.

    3.In carrying out measures for tax “exemption, offset and refund”,
the refund rate prescribed in the the Reduction of the Refund Rate for Export Goods>(Guo Fa[1995] No.29)
shall continue to be implemented, and the amount of tax “exemption, offset
and refund” shall be calculated on the basis of F.O.B. price of the export
goods.

    4.These Measures enter into force as of January 1, 1997. Specific
measures for implementation shall be formulated by the Ministry of Finance and
the State Taxation Administration.

    Measures for tax “exemption, offset and refund” for goods the export of which managed by production enterprises
with import-export operational rights
or entrusted to foreign trade enterprises as agencies constitue an important
reform of export refund control measures. People’s Governments at all
levels should proceed from the overall interest of the country, strengthen
leadership and actively support this reform. All departments concerned should
closely cooperate with one another, solve the questions which emerge in the
process of implementation in a timely manner, and in the meantime earnestly
sum up experiences so as to create conditions for the gradual expansion of the scope of implementation of the measures for tax “exemption,
offset and
refund” and the further perfection of the export refund mechanism.





REGULATIONS FOR THE PROTECTION OF THE TRADITIONAL ARTS AND HANDICRAFTS

Category  INTELLECTUAL PROPERTY RIGHT Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1997-05-20 Effective Date  1997-05-20  


Regulations for the Protection of the Traditional Arts and Handicrafts



(Promulgated by Decree No. 217 of the State Council of the People’s

Republic of China on May 20, 1997)

    Article 1  These Regulations are formulated with a view to protecting
the traditional arts and handicrafts and promoting the prosperity and
development of the cause of the traditional arts and handicrafts.

    Article 2  The traditional arts and handicrafts referred to in these
Regulations mean varieties and techniques of handicrafts having a long
history of over one hundred years with superb craftsmanship handed down
from generations with complete technical processes, made with natural raw
materials with distinct national styles and local characteristics and
enjoying a good reputation at home and abroad.

    Article 3  The State implements the policy of protection, development
and improvement in respect of the varieties and techniques of the traditional
arts and handicrafts.

    The local People’s Governments at all levels should step up leadership
in the protection of the traditional arts and handicrafts and adopt effective
measures to support and promote the prosperity and development of the cause
of the traditional arts and handicrafts of the respective localities.

    Article 4  The department in charge of the protection of the traditional
arts and handicrafts under the State Council shall be responsible for the
protection of the traditional arts and handicrafts throughout the country.

    Article 5  The State practises the system of affirmation in respect of
the varieties and techniques of the traditional arts and handicrafts. The
varieties and techniques of the traditional arts and handicrafts in line
with the conditions stipulated in Article 2 of these Regulations shall be
affirmed as the varieties and techniques of the traditional arts and
handicrafts pursuant to the provisions of these Regulations.

    Article 6  The varieties and techniques of the traditional arts and
handicrafts shall be evaluated and examined by the evaluation and examination
board composed of specialists employed by the department in charge of the
protection of the traditional arts and handicrafts under the State Council;
the department in charge of the protection of the traditional arts and
handicrafts under the State Council shall grant affirmation and make public
announcements on the basis of the evaluation and examination conclusions of
the evaluation and examination board.

    Article 7  Enterprises and individuals engaging in the making of products
of the traditional arts and handicrafts may submit applications for the
protection of the varieties and techniques to the departments in charge of
the protection of the traditional arts and handicrafts of the local People’s
Governments at the county level, and recommendations made to the department
in charge of the protection of the traditional arts and handicrafts under
the State Council by the departments in charge of the protection of the
traditional arts and handicrafts of the People’s Governments of the provinces,
autonomous regions and municipalities directly under the Central Government
upon examination and verification.

    Article 8  Enterprises and individuals applying for the affirmation of
the varieties and techniques of the traditional arts and handicrafts should,
in compliance with the provisions of the department in charge of the
protection of the traditional arts and handicrafts under the State Council,
present complete, detailed and truthful information.

    Article 9  The State adopts the following protective measures in the
affirmation of the techniques of the traditional arts and handicrafts:

    (1)gathering, compiling and setting up of archives;

    (2)collection and storing up of excellent representative works;

    (3)determination of the classification of technical secrets and
protection of the secrets in accordance with law; and

    (4)subsidizing research and training of qualified personnel.

    Article 10  Outstanding works among varieties of the traditional arts
and handicrafts shall, upon evaluation and examination by the evaluation and
examination board composed of specialists employed by the department in
charge of the protection of the traditional arts and handicrafts under the
State Council, be named China art and handicraft treasures(hereinafter
referred to as treasures) by the department in charge of the protection
of the traditional arts and handicrafts under the State Council.

    Article 11  The State adopts the following protective measures in respect
of the treasures:

    (1)The treasures collected and purchased by the State shall be stored
by the China Arts and Handicrafts Gallery or the arts and handicrafts
galleries and museums of the provinces, autonomous regions and municipalities
directly under the Central Government.

    (2)Export of the treasures shall be prohibited. Exhibition of the
treasures abroad must be subjected to the approval of the department in
charge of the protection of the traditional arts and handicrafts under the
State Council in conjunction with the departments concerned under the
State Council.

    Article 12  Individuals meeting the following conditions and engaging
in the making of products of the traditional arts and handicrafts for a
long duration may, upon evaluation and examination of the evaluation and
examination board, be conferred the post_title of Masters of Chinese Arts and
Handicrafts by the department in charge of the protection of the traditional
arts and handicrafts under the State Council:

    (1)those with outstanding achievements and enjoying a good reputation
at home and abroad; and

    (2)those with superb craftsmanship and forming their own schools.

    Article 13   The People’s Governments at all levels and departments and
units concerned should care for and support the creations of Masters of
Arts and Handicrafts, and create good working environment and conditions
for them in accordance with the following provisions:

    (1)The unit wherein the Master of Arts and Handicrafts is employed
sets up a Master’s studio for him or her;

    (2)A Master of Arts and Handicrafts is enpost_titled to engraving his or her
name on his or her works;

    (3)To create facilities for Masters of Arts and Handicrafts to take on
apprentices and pass on the techniques; and

    (4)The retirement age of Masters of Arts and Handicrafts may be
appropriately extended in accordance with the relevant provisions of
the State.

    Article 14  Overall planning and appropriate arrangements should be
worked out by the departments concerned of the People’s Governments above
the county level in respect of natural raw materials and materials
needed especially for the making of the varieties of the traditional
arts and handicrafts.

    Article 15  The State steps up protection in accordance with law and
strictly prohibits indiscriminate mining and digging in respect of such
rare minerals as gems and jades needed especially for the making of
varieties of the traditional arts and handicrafts.

    Article 16  The State encourages local People’s Governments at all levels
to take necessary measures to tap into and salvage techiniques of the
traditional arts and handicrafts, collect masterpieces of the traditional
arts and handicrafts, train personnel in techniques of the traditional arts
and handicrafts, and subsidize scientific research in the traditional arts
and handicrafts in the light of the actual conditions of the localities.

    Article 17  For enterprises engaging in the making of varieties of arts
and handicrafts with low economic benefits but high artistic values and
facing the techniques being lost, the People’s Government at all levels
should take necessary measures to render support and assistance.

    Article 18  Enterprises engaging in the making of products of the
traditional arts and handicrafts should establish and perfect the protection
or security system for the techniques of the traditional arts and handicrafts
and strengthen in real earnest the management of the techniques of the
traditional arts and handicrafts.

    Individuals engaging in the making of traditional arts and handicrafts
products should abide by the provisions of the relevant laws and regulations
of the State and must not divulge any technical secret and other commercial
secret known in the process of making the traditional arts and handicrafts
products.

    Article 19  For units and individuals making outstanding contributions
to the cause of inheriting, protecting and developing the traditional arts
and handicrafts, the State shall give rewards.

    Article 20  Whoever in violation of the provisions of these Regulations
having committed any of the following acts shall be given administrative
punishment or administrative penalty by the department concerned pursuant
to the provisions of the relevant laws and regulations; for those which
constitute a criminal offence, criminal liabilities shall be investigated
in accordance with law:

    (1)burglary or disclosure of technical secrets of the traditional arts
and handicrafts;

    (2)illegal mining of rare mineral resources for the making of traditional
arts and handicrafts or pirating and selling of rare mineral products for the
making of traditional arts and handicrafts; and

    (3)smuggling of art treasures out of the country.

    Whoever making and selling fake or imitated works of the traditional arts
and crafts with names of Masters of China Arts and Handicrafts affixed
thereon should bear civil liabilities in accordance with law; the departments
concerned may, in accordance with the provisions of the relevant laws and
regulations, impose administrative penalties.

    Article 21  These Regulations come into force as of the date of
promulgation.



DECISION OF THE STANDING COMMITTEE OF THE NATIONAL PEOPLE’S CONGRESS REGARDING THE TREATMENT OF THE EXISTING HONG KONG LAWS ACCORDING TO ARTICLE 160 OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION BASIC LAW

Category  SPECIAL ADMINISTRATIVE REGION Organ of Promulgation  The Standing Committee of the National People’s Congress Status of Effect  In Force
Date of Promulgation  1997-02-23 Effective Date  1997-02-23  


Decision of the Standing Committee of the National People’s Congress Regarding the Treatment of the Existing Hong Kong Laws According
to Article 160 of the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China



(Adopted at the 24th Meeting of the Standing Committee of the Eighth

National People’s Congress on February 23, 1997)

    The Basic Law of the Hong Kong Special Administrative Region of the
People’s Republic of China (hereinafter referred to as the Basic Law)
provides in its Article 160: “Upon the establishment of the Hong Kong Special
Administrative Region, the laws previously in force in Hong Kong shall be
adopted as laws of the Region except for those which the Standing Committee
of the National People’s Congress declares to be in contravention of this
Law. If any laws are later discovered to be in contravention of this Law, they
shall be amended or cease to have force in accordance with the procedure as
prescribed by this Law.” Article 8 of the same Law provides: “The laws
previously in force in Hong Kong, that is, the common law, rules of equity,
ordinances, subordinate legislation and customary law shall be maintained,
except for any that contravene this Law, and subject to any amendment by the
legislature of the Hong Kong Special Administrative Region.” According to the
aforesaid provisions, and having deliberated the suggestions by the
Preparatory Committee for the Hong Kong Special Administrative Region
regarding the treatment of the laws previously in force in Hong Kong, the
24th Meeting of the Eighth National People’s Congress hereby makes the
following decisions:

    1. The laws previously in force in Hong Kong, including the common law,
rules of equity, ordinances, subordinate legislation and customary law, shall
be adopted as laws of the Hong Kong Special Administrative Region, except for
those contravening the Basic Law.

    2. The ordinances and subordinate legislation previously in force in Hong
Kong, which are listed in Appendix I of this Decision, shall not be adopted
as laws of the Hong Kong Special Administrative Region for their contravening
the Basic Law.

    3. Some provisions of certain ordinances and subordinate legislation
previously in force in Hong Kong, which are listed in Appendix II of this
Decision, shall not be adopted as laws of the Hong Kong Special
Administrative Region for their contravening the Basic Law.

    4. The laws previously in force in Hong Kong which have been adopted as
laws of the Hong Kong Special Administrative Region shall, starting July 1,
1997, make necessary modification, adaptation, restriction or exception in
applying, so as to tally with the relevant provisions of the Basic Law and
the status of Hong Kong after the resumption of the exercise by the People’s
Republic of China of the sovereignty over Hong Kong. For instance, the
application of the New Territories Land (Exemption) Ordinance shall conform
to the above-mentioned principles.

    In addition to the aforesaid principles, among the ordinances and
subordinate legislation previously in force,

    (1) If any laws concerning foreign affairs related with the Hong Kong
Special Administrative Region are inconsistent with any national law in force
in Hong Kong, the latter shall prevail, with conformation with the
international rights and obligations which the Central People’s Government
enjoys or bears.

    (2) Any provisions granting privileges to Britain or other nations or
regions of the British Commonwealth shall not be maintained, except for those
reciprocity provisions between Hong Kong and Britain or other nations or
regions of the British Commonwealth.

    (3) As for provisions concerning the rights, immunity and duties of
military forces stationed to Hong Kong by Britain, those not contravening the
Basic Law and the Garrison Law of the Hong Kong Special Administrative Region
of the People’s Republic of China shall be maintained and apply to the
military forces stationed to Hong Kong by the Central People’s Government of
the People’s Republic of China.

    (4) Provisions concerning English language’s higher authenticity than
Chinese language shall be interpreted as both of them are formal languages.

    (5) Provisions containing citations of British laws may continue to be
referred to and apply during the transition process before any amendment has
been made to them, provided that they do not impair the sovereignty of the
People’s Republic of China or contravene the Basic Law.

    5. Unless the context otherwise requires, the laws previously in force in
Hong Kong adopted as laws of the Hong Kong Special Administrative Region
under Article 4 of this Decision shall have their post_titles or expressions
interpreted and applied in accordance with the substitution principles
provided for in Appendix III.

    6. Any laws previously in force in Hong Kong adopted as laws of the
Hong Kong Special Administrative Region may be amended or invalidated in
accordance with the procedures stipulated by the Basic Law, if, in the
future, they are discovered to contravene the Basic Law.

    Appendix I

    The following ordinances and subordinate legislation among the laws
previously in force in Hong Kong shall not be adopted as laws of the Hong
Kong Special Administrative Region because of their contravening the Basic
Law:

    1. Trustees (Hong Kong Government Securities) Ordinance (Chapter 77,
Laws of Hong Kong);

    2. Application of English Law Ordinance (Chapter 88, Laws of Hong Kong);

    3. Foreign Marriage Ordinance (Chapter 180, Laws of Hong Kong);

    4. Chinese Extradition Ordinance (Chapter 235, Laws of Hong Kong);

    5. Colony Armorial Bearings (Protection) Ordinance (Chapter 315, Laws of
Hong Kong);

    6. Secretary of State for Defence (Succession to Property) Ordinance
(Chapter 193, Laws of Hong Kong);

    7. Royal Hong Kong Regiment Ordinance (Chapter 199, Laws of Hong Kong);

    8. Compulsory Service Ordinance (Chapter 246, Laws of Hong Kong);

    9. Army and Royal Air Force Legal Services Ordinance (Chapter 286, Laws
of Hong Kong);

    10. British Nationality (Miscellaneous Provisions) Ordinance
(Chapter 186, Laws of Hong Kong);

    11. British Nationality Act 1981 (Consequential Amendments) Ordinance
(Chapter 373, Laws of Hong Kong);

    12. Electoral Provisions Ordinance (Chapter 367, Laws of Hong Kong);

    13. Legislative Council (Electoral Provisions) Ordinance (Chapter 381,
Laws of Hong Kong); and

    14. Boundary and Election Commission Ordinance (Chapter 432, Laws of
Hong Kong).

    Appendix II

    Certain provisions of the following ordinances and subordinate
legislation among the laws previously in force in Hong Kong shall not be
adopted as laws of the Hong Kong Special Administrative Region because of
their contravening the Basic Law:

    1. The definition of “permanent residents of Hong Kong” in Section 2, and
the provisions of “permanent residents of Hong Kong” in Appendix 1,
Immigration Ordinance (Chapter 115, Laws of Hong Kong);

    2. Any provisions for the implementation in Hong Kong of the British
Nationality Act;

    3. Provisions concerning election in Urban Council Ordinance
(Chapter 101, Laws of Hong Kong);

    4. Provisions concerning election in Regional Council Ordinance
(Chapter 385, Laws of Hong Kong);

    5. Provisions concerning election in District Boards Ordinance
(Chapter 366, Laws of Hong Kong);

    6. Subordinate legislation A, Urban Council, Regional Council and Board
Election Expenses Order and subordinate legislation C, Resolution of the
Legislative Council, of Corrupt and Illegal Practices Ordinance (Chapter 288,
Laws of Hong Kong);

    7. Provisions concerning the interpretation and the purpose of the
Ordinance in Section 2(3), provisions concerning the “affection to previous
law” in Section 3 and provisions concerning the “interpretation of laws in
the future” in Section 4, of Hong Kong Bill of Rights Ordinance (Chapter 383,
Laws of Hong Kong);

    8. Provisions concerning the Ordinance’s overriding position in
Section 3(2), of Personal Data (Privacy) Ordinance (Chapter 486, Laws of Hong
Kong);

    9. Major amendments, having been made since July 17, 1992, to the
Societies Ordinance (Chapter 151, Laws of Hong Kong); and

    10. Major amendments, having been made since July 27, 1995, to the Public
Order Ordinance (Chapter 245, Laws of Hong Kong).

    Appendix III:

    The laws previously in force in Hong Kong adopted as laws of the Hong
Kong Special Administrative Region shall generally have their post_titles and
expressions interpreted and applied in accordance with the following
substitution principles:

    1. Any reference of “the Queen”, “royal”, “the British Government”,
“Secretary of State” or other similar post_titles or expressions shall be regarded
as referring to the central or other competent authorities of China, if the
provisions are concerning the Hong Kong land use right or involving the
affairs under the central administration or the relationship between the Hong
Kong Special Administrative Region and the central authorities prescribed by
the Basic Law; in other context, they shall be regarded as referring to
the government of the Hong Kong Special Administrative Region.

    2. Any reference of “the Queen in Privy Council” or the “Privy Council”
shall be regarded as referring to the Court of Final Appeal of the Hong Kong
Special Administrative Region, if the provisions are concerning the right of
appeal; in other context, it shall be treated in accordance with the
provisions of the preceding paragraph.

    3. Any government organizations or semi-governmental organizations which
have their name preceded by “royal” shall delete the word “royal” and
regarded as organizations of the Hong Kong Special Administrative Region.

    4. Any reference of “this colony” shall be regarded as referring to the
Hong Kong Special Administrative Region; any provisions concerning the
territories of Hong Kong shall be applied after relevant interpretations have
been made in accordance with the map of the administrative division of the
Hong Kong Special Administrative Region published by the State Council.

    5. Any reference of “Supreme Court” and “High Court” shall be regarded as
respectively referring to the High Court and the Court of First Instance of
the High Court.

    6. Any reference of “Governor”, “Governor in Executive Council”, “Chief
Secretary”, “Attorney General”, “Chief Justice”, “Secretary for Home Affairs”,
“Secretary for Constitutional Affairs”, “Commissioner of Customs and Excise”
or “Judges” shall be regarded as respectively referring to the Chief Executive
of the Hong Kong Special Administrative Region, Chief Executive in the
Executive Council, Administrative secretary, Secretary of Justice, Chief
Justice of the Court of Final Appeal or Chief Judge of the High Court,
Secretary for Home Affairs, Secretary for Electoral Affairs, Commissioner of
Customs and Excise and Judges of the High Court.

    7. Any post_titles or expressions in the Chinese texts of laws previously in
force in Hong Kong, of or regarding the Legislative Council, the judiciary or
the executive authorities or the personnel thereof shall be interpreted and
applied in accordance with relevant provisions of the Basic Law.

    8. Any reference of “the People’s Republic of China”, “China” or other
similar post_titles or expressions shall be regarded as referring to the People’s
Republic of China including Taiwan, Hong Kong and Macao; any individual or
simultaneous reference of the mainland, Taiwan, Hong Kong or Macao shall be
regarded as referring to a part of the People’s Republic of China.

    9. Any reference of “foreign countries” or other similar post_titles or
expressions shall be regarded as referring to any country or region other
than the People’s Republic of China or, in accordance with the context of the
law or articles or sections, regarded as referring to “any area outside the
Hong Kong Special Administrative Region”; any reference of “foreigners” or
other similar post_titles or expressions shall be regarded as referring to any
persons other than citizens of the People’s Republic of China.

    10. Any provisions as “the stipulations of this ordinance shall not
prejudice nor may be regarded as prejudice to the rights of the Queen, her
crown prince or successor to the throne” shall be interpreted as “the
stipulations of this ordinance shall not prejudice nor may be regarded as
prejudice to the rights enjoyed by the Central Government or the government
of the Hong Kong Special Administrative Region according to the provisions of
the Basic Law and other laws.





CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON APPLICABLE RATE OF INCOME TAX FOR THE BRANCHES OF THE ENTERPRISES WITH FOREIGN INVESTMENT

The State Administration of Taxation

Circular of the State Administration of Taxation on Applicable Rate of Income Tax for the Branches of the Enterprises with Foreign
Investment

GuoShuiFa [1997] No.49

April 9, 1997

The state and local tax bureaus of various provinces, autonomous regions, municipalities directly under the Central Government and
municipalities separately listed on the State plan:

Recently, the issues on how to determine the applicable income tax rate for the branches established in the area within the territory
of our country where different rates of income tax exist by the enterprises with foreign investment under the Income Tax Law of the
People’s Republic of China on the Enterprises with Foreign Investment and Foreign Enterprises (hereinafter referred to as Tax Law)
have been enquired for many times by the local taxation institutions. In accordance with Article 5 and Article 7 of Law of Income
Tax and Article 71 of Rules for the Implementation of it, the above issues should be handled depending on the following situations:

I.

The branches established in our country by the enterprises with foreign investment and undertaking the production, commodity trade
and services are applied to the income tax rate of the local enterprises with the same trade. The headquarters of the foreign-funded
enterprises should pay the income tax of the branches on a consolidated basis.

II.

The profits of products by the enterprises with foreign investment which produce and sell the products in our country by their own
is applied to the income tax rate of the local enterprises in the area where the products are produced, no matter whether the enterprises
sell the products through the sales agent or not and no matter how the sales organizations square the account. The income tax should
be calculated and paid on a consolidated basis by their headquarters.

III.

The previous settlements opposite to this Circular can be adjusted according to the relevant provisions of this Circular from 1996.



 
The State Administration of Taxation
1997-04-09

 






INTERIM MEASURES ON THE ESTABLISHMENT OF CHINESE-FOREIGN EQUITY JOINT RESEARCH AND DEVELOPMENT INSTITUTIONS AND CHINESE-FOREIGN CONTRACTUAL JOINT RESEARCH AND DEVELOPMENT INSTITUTIONS

The State Science and Technology Commission

Interim Measures on the Establishment of Chinese-foreign Equity Joint Research and Development Institutions and Chinese-foreign Contractual
Joint Research and Development Institutions

the State Science and Technology Commission

September 10,1997

Chapter I General Provisions

Article 1

These Measures are formulated in accordance with the provisions of Article 36 of the Law of the People’s Republic of China on Progress
of Science and Technology for the purposes of safeguarding the lawful rights and interests of Chinese-foreign (overseas) equity joint
research and development institutions and Chinese-foreign (overseas )contractual joint research and development institutions (hereinafter
referred to as “Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions”), enhancing basic
research, applied research and experimental developments, and fostering international scientific and technological cooperation and
exchange.

Article 2

These Measures are applicable to Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions
established by foreign and overseas organizations or individuals (hereinafter referred to as “the foreign party”) with Chinese scientific
research institutes and research and development institutions of higher education institutions (hereinafter referred to as “the Chinese
party”) within the territory of the People’s Republic of China.

Article 3

A Chinese-foreign equity joint research development institution refers to a research and development institution which is jointly
established by a Chinese party and a foreign party on the basis of a joint venture agreement where both parties invest capital, equipment
and scientific and technological resources. The investment amount of the foreign party in a Chinese-foreign equity joint research
and development institution must account for no less than 25 per cent of the total investment amount. A Chinese-foreign equity joint
research and development institution shall have the qualification of an institution legal person.

Article 4

A Chinese-foreign contractual joint research and development institution refers to a research and development institution which is
established in cooperation by a Chinese party and a foreign party on the basis of a contract. A Chinese-foreign contractual joint
research and development institution shall not have the qualification of a legal person.

Article 5

The establishment of a Chinese-foreign equity or Chinese-foreign contractual joint research and development institution shall abide
by the laws, regulations and policies of the People’s Republic of China and implement the principles of equity and mutual benefit,
honesty and trustworthiness, sharing of achievements, joint assumption of risk, protection of intellectual property and respect for
international practices.

Article 6

Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions shall, in the fields of natural
science and its interrelated scientific and technological fields, engage in basic research, applied research, high scientific and
technological research, social public welfare-related scientific research, and in technological developments and experimental developments
within the above mentioned fields.

Where a Chinese-foreign equity or Chinese-foreign contractual joint research and development institution is to engage in production
or business operations, it must obtain approval from its competent department in advance, then separately undertake enterprise legal
person registration with the local administrative department for industry and commerce and apply for the relevant business license.

Article 7

To establish a Chinese-foreign equity or Chinese-foreign contractual joint research and development institution, the foreign party
to the equity or cooperation shall supply advanced scientific and technological achievements, information materials and testing equipment
or send highly skilled scientific and technological personnel to participate in the joint research and development work.

Article 8

The State Science and Technology Commission shall be responsible for macro-administration, coordination and guidance in respect of
Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions throughout the country. The various
departments and directly affiliated organizations of the State Council shall centrally administer Chinese-foreign equity and Chinese-foreign
contractual joint research and development institutions within their respective departments. The science and technology commissions
of the provinces, autonomous regions, municipalities directly under the Central Government and municipalities separately listed in
the State plan shall centrally administer Chinese-foreign equity and Chinese-foreign contractual join research and development institutions
within their respective administrative areas.

Chapter II Establishment, Alteration and Termination

Article 9

The establishment of a Chinese-foreign equity or Chinese-foreign contractual joint research and development institution must meet
the following requirements:

(1)

complying with the overall arrangements of the State’s allocation of scientific and technological resources;

(2)

its research and development shall be in a direction which complies with technology and industry policies of the State;

(3)

possessing articles of association complying with China’s laws, regulations and policies;

(4)

possessing necessary scientific research funds, testing equipment, intelligence information and other scientific research requirements;

(5)

possessing a certain number of scientific research personnel;

(6)

possessing fixed premises and organizational structure;

(7)

other requirements stipulated by the competent department.

Article 10

The establishment of a Chinese-foreign equity or Chinese-foreign contractual joint research and development institution shall be examined
and approved according to the following jurisdictions:

(1)

When a research and development institution under the jurisdiction of a department or a directly subordinate institution of the State
Council applies to establish a Chinese-foreign equity joint research and development institution, the matter shall be approved by
the competent department, and reported to the State Science and Technology Commission for examination and verification, and then
examined and approved by the Office of the State Commission for Public Service Structure and Establishment Administration.

(2)

When a research and development institution under the jurisdiction of a province, autonomous region, municipality directly under the
Central Government or municipality separately listed in the State plan applies to establish a Chinese-foreign equity joint research
and development institution, the matter shall be approved by the local competent department, and reported to the science and technology
commission of the province, autonomous region, municipality directly under the Central Government or municipality separately listed
in the State plan for examination and verification, and then examined and approved by the local departments for public service structure
and establishment administration.

(3)

When a research and development institution applies to establish a Chinese-foreign contractual joint research and development institution,
the matter shall be examined and approved by the competent department in accordance with the subordination framework, and then reported
to the science and technology committee at the same level for the record.

Article 11

To establish a Chinese-foreign equity joint research and development institution, the joint venture agreement shall specify the following
items:

(1)

the names, addresses and countries or regions of the two parties to the joint venture;

(2)

the name and domicile of the research and development institution;

(3)

the field, specialization and direction of research and development;

(4)

the total capital amount of the institution;

(5)

the means of investment, investment amounts and conditions for the transfer of investment in respect of all parties;

(6)

the organizational structure of the research and development institution;

(7)

the enpost_titlement to and sharing of scientific and technological achievements and intellectual properties;

(8)

the life of the joint venture and liquidation procedures after its termination;

(9)

liability for breach of contract;

(10)

measures for resolving disputes;

(11)

the language(s) to be used in the agreement and the conditions required for the agreement to take effect.

A feasibility proof and assessment report, the articles of association of the research and development institution and a capital verification
certificate shall be attached to the joint venture agreement.

Article 12

To establish a Chinese-foreign contractual joint research and development institution, the contractual venture contract shall specify
the following items:

(1)

the names, addresses and countries or regions of the two parties to the contractual venture;

(2)

the type of the research and development institution and its name and domicile;

(3)

the fields of scientific experimentation, research and development or technological innovations in which the institution is to engage;

(4)

the conditions of cooperation;

(5)

the means of cooperation;

(6)

the enpost_titlement to and sharing of scientific and technological achievements and intellectual properties;

(7)

the life of the contractual venture and relevant matters after its termination;

(8)

liability for breach of contract;

(9)

measures for resolving disputes;

(10)

the language(s) to be used in the contract and the conditions required for the contract to take effect.

A feasibility study report and the articles of association of the research and development institution shall be attached to the contract.

Article 13

No Chinese-foreign equity or Chinese-foreign contractual joint research and development institution may be established in any fields
which involve State security or vital interests where confidentiality is essential, or in any fields in which investment in China
by foreign or overseas organizations is prohibited in accordance with the laws, regulations or policies of the State.

Article 14

A Chinese-foreign equity joint research and development institution which is to be divided or merged, or to alter its articles of
association, relocate or amend its name, etc., must obtain approval from its original examination and approval organ. Its claims
and debts shall be borne by the altered research and development institution.

A Chinese-foreign contractual joint research and development institution which is to alter the contents of its contract must report
the matter to its original examination and approval organ for the record.

Article 15

A Chinese-foreign equity or Chinese-foreign contractual joint research and development institution may apply for renewal with its
original examination and approval organ 60 days before the expiry of the joint venture agreement or contract.

Article 16

To establish a Chinese-foreign equity or Chinese-foreign contractual joint research and development institution, the two parties may
use currency, factories, equipment, instruments and other assets as investment; they may also use intellectual properties, scientific
and technological achievements, land-use rights and other intangible assets as investment. These assets shall be assessed by an assets
assessment institution recognized by the administration department of State-owned assets.

Chapter III Rights and Obligations

Article 17

A Chinese-foreign equity joint research and development institution shall enjoy the following rights:

(1)

enjoying legal person property rights;

(2)

formulating research and development plans, deciding research and development topics;

(3)

deciding internal organizational structures and personnel allocations;

(4)

employing scientific and technological personnel and deciding their wages and remuneration on its own;

(5)

obtaining intellectual properties and entering into technology transfer contracts with other parties in respect of these intellectual
properties.

Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions may apply to undertake science
and technology projects listed in State plans or science and technology projects commissioned by enterprises or society.

Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions meeting the requirements stipulated
by the State may, upon approval by the relevant departments, recruit students with masters or doctorate degree.

Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions may open their laboratories, research
centers, experimental bases, etc., to domestic and foreign parties.

Article 18

Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions shall, in accordance with the provisions
of the laws and regulations of the People’s Republic of China, stick to their research and development direction, and promote the
progress of science and technology, the transformation of scientific and technological achievements and the popularization of scientific
and technological knowledge.

Article 19

A Chinese-foreign equity joint research and development institution which employs scientific and technological personnel shall enter
into a contract of appointment with these personnel. The contract shall specify the appointment, dismissal, wage and remuneration,
welfare benefits, labor protection, personal insurance, intellectual properties and other issues. When appointing part-time personnel,
an agreement shall be concluded with the unit to which the personnel belong.

Article 20

For scientific and technological achievements and intellectual properties which result from the work of a Chinese-foreign equity or
Chinese-foreign contractual joint research and development institution, their enpost_titlement to and sharing shall be handled in accordance
with the provisions of the joint venture agreement or contractual contract. If no relevant provisions are included in the joint venture
agreement or contractual contract, the above-mentioned achievements shall be jointly owned by the two parties, and the Chinese party
shall enjoy priority right of usage and transfer.

Chapter IV Awards and Penalties

Article 21

The inventions, discoveries and other scientific and technological achievements which are completed by Chinese-foreign equity and
Chinese-foreign contractual joint research and development institutions within the Chinese territory may, subject to the recommendation
by the competent department, receive a State Natural Science Prize, Invention Prize or Scientific and Technological Progress Prize
of the People’s Republic of China.

Foreign joint venture partners and contractual venture partners in Chinese-foreign equity and Chinese-foreign contractual joint research
and development institutions, who have made an important contribution in promoting China’s scientific and technological advancement,
may be awarded an International Science and Technology Cooperation Prize in accordance with the provisions of Article 54 of the
Law of the People’s Republic of China on Progress of Science and Technology.

Article 22

Where a Chinese-foreign equity or Chinese-foreign contractual joint research and development institution departs from its research
and development direction and violates the laws or regulations of China, it shall be ordered by the competent department to rectify
the situations within a prescribed time limit; if the rectification is ineffective, the institution shall be dismantled.

Where a Chinese-foreign equity or Chinese-foreign contractual joint research and development institution infringes upon or steals
other’s intellectual properties or encroaches other’s technological and economic rights and interests, it shall bear the corresponding
legal liability.

Article 23

Where any of the relevant administrative departments or their staff neglect their duties, commit illegalities by fraudulent means
or for personal gains, or oppress or obstruct research and development activities, penalties shall be imposed in accordance with
the laws and administrative regulations.

Chapter V Supplementary Provisions

Article 24

Financial administration and accounting practices of Chinese-foreign equity and Chinese-foreign contractual joint research and development
institutions shall be governed in accordance with relevant provisions of the Ministry of Finance.

Article 25

Chinese-foreign equity and Chinese-foreign contractual joint research and development institutions established before the promulgation
of these Measures shall undertake examination and approval procedures again in accordance with the provisions of these Measures.

Article 26

The State Science and Technology Commission shall be responsible for the interpretation of these Measures.

Article 27

These Measures shall enter into force as of the date of promulgation.



 
The State Science and Technology Commission
1997-09-10

 






REGULATIONS ON NUCLEAR EXPORT CONTROL

Category  FOREIGN TRADE Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1997-09-10 Effective Date  1997-09-10  


Regulations of the People’s Republic of China on Nuclear Export Control



(Adopted at the 61st Executive Meeting of the State Council on August 1,

1997  Promulgated by Decree No. 230 of the State Council of the People’s
Republic of China on September 10, 1997)

    Article 1  These Regulations are formulated for the purpose of enhancing
nuclear export control, safeguarding state security and public interest of society and promoting international cooperation in the
peaceful uses of nuclear energy.

    Article 2  Nuclear export referred to in these Regulations means export
for trade as well as grant to foreign countries, exhibitions, scientific-
technological cooperation and foreign assistance of such items as nuclear
materials, nuclear equipment and non-nuclear materials for reactors and their
related technologies listed in the (hereinafter
referred to as the ) as the appendix to these Regulations.

    Article 3  The State exercises strict control over nuclear export and
strictly abides by the international obligations undertaken for non-
proliferation of nuclear weapons.

    The State does not advocate, encourage or engage in proliferation of nuclear weapons, nor shall it assist
other countries in the development of nuclear weapons. Nuclear export shall only be used for peaceful purposes
and shall be subject to safeguards and supervision of the International
Atomic Energy Agency, and an acceptor must not transfer it to any third
country without the permission of the Chinese Government. The State
prohibits provision of assistance to nuclear facilities not under the
safeguards and supervision of the International Atomic Energy Agency,
and no nuclear export to them or personnel and technological exchanges
and cooperation shall be conducted.

    Article 4  Nuclear export shall abide by the provisions of the relevant
state laws and regulations and must not harm state security or public interest
of society.

    Article 5  Examination of and permission for nuclear export shall abide
by the following norms:

    (1)The acceptor government shall guarantee that the nuclear materials,
nuclear equipment or non-nuclear materials for reactors supplied by China
as well as the special fissionable materials produced through the uses
thereof shall not be used for the purpose of any nuclear explosion;

    (2)The acceptor government shall guarantee that it shall take approriate
in-kind protective measures for the nuclear materials supplied by China as
well as the special fissionable materials produced through the uses thereof;

    (3)The acceptor government has concluded with the International Atomic
Energy Agency the agreement for safeguards and supervision which is in force
and has undertaken to integrate into the agreement for safeguards and
supervision the nuclear materials, nuclear equipment or non-nuclear materials
for reactors supplied by China as well as the special fissionable materials
produced through the uses thereof and accept the safeguards and supervision
of the International Atomic Energy Agency;

    (4)The acceptor pledges that it will not retransfer to any third party
the nuclear materials, nuclear equipment or non-nuclear materials for
reactors and the related technologies thereof supplied by China without
advance permission in writing of the State Atomic Agency of China; for
retransfer with advance permission, the third party accepting the retransfer
shall undertake the obligations equivalent to those taking direct supply
from China.

    Article 6  Nuclear export shall be monopolized by units designated by the
State Council, and no other unit or individual shall engage in the operations.

    Article 7  For export of items and the related technologies thereof listed
in the , an application shall be filed with the State Atomic
Energy Agency, an application form for nuclear export filled out and the
following documents presented:

    (1)Certification of monopoly qualification for nuclear export of the
applicant;

    (2)Identifications of the legal representative, chief manager in the
operations as well the person handling the operations of the applicant;

    (3)A copy of the contract or agreement;

    (4)Analytical reports of the nuclear materials or non-nuclear materials
for reactors;

    (5)Certification of the end user;

    (6)Certification of guarantee provided by the acceptor pursuant to the
provisions of Article 5 of these Regulations; and

    (7)Other documents required to be presented by the examination organ.

    Article 8  The applicant shall truthfully fill out the application form
for nuclear export.

    Application forms for nuclear export shall be uniformly printed by the
State Atomic Energy Agency.

    Article 9  The applicant shall file revisions in time in the case of changes in the itmes filled out in the application form for
nuclear export
or file a new application for export.

    The applicant shall withdraw the application for nuclear export in time
in the case of suspension of nuclear export.

    Article 10  The State Atomic Energy Agency shall, within fifteen working
days starting from the date of the receipt of the application form for
nuclear export and the documents listed in Article 7 of these Regulations,
put forth its remarks of examination and notify the applicant; for those
approved upon examination, the cases shall be processed pursuant to the
following provisions in the light of different circumstances:

    (1)For export of nuclear materials, the case shall be transmitted to
the Defense Science Technology and Industries Commission for reexamination;

    (2)For export of nuclear equipment or non-nuclear materials for reactors
and the related technologies thereof, the case shall be transmitted to the
Ministry of Foreign Trade and Economic Cooperation for reexamination or to
the Ministry of Foreign Trade and Economic Cooperation for reexamination
in conjunction with the Defense Science Technology and Industries Commission.

    The Defense Science Technology and Industries Commission and the Ministry
of Foreign Trade and Economic Cooperation shall, within fifteen working days
starting from the date of receipt of the application form for nuclear export,
the documents listed in Article 7 of these Regulations and the remarks of examination transmitted by the State Atomic Energy Agency,
put forth remarks
of reexamination and notify the applicant.

    In the case of necessity to extend the time limit for examination or
reexamination by the State Atomic Energy Agency, the Defense Science
Technology and Industries Commission and the Ministry of Foreign Trade and
Economic Cooperation owing to extraordinary circumstances, an extension of fifteen working days may be effected in which case, however,
the applicant
should be notified.

    Article 11  For nuclear export having important impact on state security,
public interest of society or foreign policy, the State Atomic Energy Agency,
the Defense Science Technology and Industries Commission and the Ministry of Foreign Trade and Economic Cooperation should consult
with the Ministry of Foreign Affairs in the examination or reexamination; the case should be
submitted to the State Council for examination and approval when necessary.

    The cases submitted to the State Council for examination and approval
shall not be subject to the time limit prescribed in Article 10 of these
Regulations.

    Article 12  The Ministry of Foreign Trade and Economic Cooperation
shall issue nuclear export licenses to applications for nuclear export upon
approval after reexamination or examination and approval pursuant to the
provisions of these Regulations.

    Article 13  A holder of the nuclear export license should return the
original license for changes in the export items and the related technologies
thereof in the original application and reapply for a nuclear export license
pursuant to the provisions of these Regulations.

    Article 14  The Ministry of Foreign Trade and Economic Cooperation
should inform the State Atomic Energy Agency in writing of the issuance of a nuclear export license.

    Article 15  A nuclear export monopoly unit should, in the process of nuclear export, present the nuclear export license to the customs,
go through
customs formalities pursuant to the provisions of the Customs Law and accept
customs supervision and control.

    Article 16  In the case of violation of the guarantee made pursuant to
the provisions of Article 5 of these Regulations by the acceptor or its
government, or when the danger of nuclear proliferation arises, the Ministry
of Foreign Trade and Economic Cooperation is, in conjunction with the
departments concerned under the State Council, empowered to make a decision on
the suspension of export of the items concerned or the related technologies
thereof, and the Ministry of Foreign Trade and Economic Cooperation shall
inform the customs in writing for execution.

    Article 17  For export of nuclear materials, nuclear equipment, non-
nuclear materials for reactors and the related technologies thereof in
violation of the provisions of these Regulations constituting a criminal
offense, criminal responsibility shall be investigated according to law;
for a case which does not constitute a criminal offense, the violator
shall be penalized pursuant to the provisions of the Customs Law and
the Foreign Trade Law.

    Article 18  For forgery, alteration, buying and selling of nuclear
export licenses, criminal responsibility shall be investigated according to
law.

    Article 19  State functionaries for nuclear export control who commit
a criminal offense in negligence of duties, self-seeking misconduct or
abuse of power shall be investigated of the criminal responsibility
according to law; those whose conduct do not constitute a criminal offense
shall be given administrative sanctions in accordance with law.

    Article 20  The State Atomic Energy Agency may, in conjunction with
such departments as the Defense Science Technology and Industries Commission,
the Ministry of Foreign Trade and Economic Cooperation, the Ministry of Foreign Affairs and the General Administration of Customs,
make adjustments
in the in the light of actual conditions for implementation
upon approval of the State Council.

    Article 21  In the case of differences in provisions between the
international treaties concluded or acceded to by the People’s Republic of China and these Regulations, the provisions of the international
treaties
shall apply; however, the articles for which the People’s Republic of China
has stated her reservations are excluded.

    Article 22  These Regulations shall come into force as of the date of promulgation.(For Nuclear Export Control List, please refer
to the appendix
in Chinese.)





INTERIM MEASURES FOR EXEMPTION FROM THE IMPORT DUTIES ON THE SPECIAL-PURPOSE ARTICLES FOR THE DISABLED

Category  CUSTOMS Organ of Promulgation  The State Council Status of Effect  In Force
Date of Promulgation  1997-04-10 Effective Date  1997-04-10  


Interim Measures for Exemption From the Import Duties on the Special-purpose Articles for the Disabled



(Approved by the State Council on January 22, 1997 and promulgated by

Decree No.61 of the General Customs Administration on April 10, 1997)

    Article 1  These Measures are formulated with a view to supporting
the work of recovery of the disabled, facilitating the import of the
special-purpose articles for the disabled.

    Article 2  Customs import duties and value-added taxes or consumption
taxes in import links shall be exempted from on the following import
special-purpose articles for the disabled:

    (1) The propping and auxiliary utensils, artificial limbs and relevant
parts, artificial eyes, artificial noses, supporting belts for internal
organs, orthopedic appliances, orthopedic shoes, non-motorized walking-aids,
means of transport instead of walk(not including cars, motors), self-help
living appliances, or special sanitary materials for the mutilated persons;

    (2) Walking-sticks for the persons disabled in eyes, guided glasses for
the blind, sight-aids, reading appliances for the blind;

    (3) Language training appliances for the lingually or aurally disabled;

    (4) Action training appliances and living ability training articles for
the intellectually disabled.

    When importing the special-purpose articles for the disabled as
prescribed in the proceeding paragraph, the duty payers shall go through
the formalities of exemption from Customs duties directly at the Customs
authorities.

    Article 3  The following special-purpose articles for the disabled which
are imported by relevant units and can not be made in China shall, upon the
approval of the Ministry of Civil Affairs or the Chinese Federation for the
disabled according to subordinate relations and after examination of
the General Customs Administration, be exempted from Customs import duties
and value-adding taxes or consumption taxes:

    (1) Recovery equipments and special-purpose equipments for the disabled,
including guarding equipments of beds or wards of hospitals, central guarding
equipments, biochemical analysing instruments and ultrasonic diagnosing
instruments;

    (2) Specific educational equipments and professional educational
equipments for the disabled;

    (3) Instruments of assessing and gauging of professional ability for the
disabled;

    (4) Special-purpose working instruments and working protection instruments
for the disabled;

    (5) Special-purpose instruments for the cultural and sports acts of the
disabled;

    (6) Special-purpose equipments for producing assembling and testing
artificial limbs,including special-purpose milling and polishing machines,
special-purpose vacuum forming machines, special-purpose flat hearing
machines and comprehensively testing instruments employed in artificial
limbs production;

    (7) Hearing aids used by persons disabled in ears.

    Article 4  The term “relevant units” stipulated in Article 3 of these
Measures denotes:

    (1) Enterprises and institutions directly under the Ministry of Civil
Affairs, and welfare institutions, artificial limbs factories and recovery
hospitals for disabled disaled soldiers(including various kinds of sanitariums
for disabled revolutionary soldiers, hospitals and recovery hospitals for
disabled disaled soldiers directly under provinces, autonomous regions and
municipalities directly under the Central Government;

    (2) Institutions directly under the Chinese Federation for the Disabled
(the Chinese Welfare Foundation for the Disabled), welfare institutes
and recovery institutes directly under the Federation for the Disabled(the
Welfare Foundation for the Disabled) of provinces, autonomous regions and
municipalities directly under the Central Government;

    Article 5  The import special-purpose articles for the disabled with
duties exemption according to These Measures shall not be used for other
purposes.

    Where anyone, in violation of the provisions of the proceeding paragraph,
use the import articles with duties exemption for other purposes, and such
an act constitutes a smuggling crime, he shall be investigated for criminal
responsibilities in accordance with law; Where such an act does not
constitutes a crime, the case shall be treated as a smuggling act or an act
violating Regulations on Customs control.

    Article 6  Provisions for implementation shall be formulated by the
General Customs Administration in accordance with These Measures.

    Article 7  These Measures shall come into effect as of the date of
promulgation.





MEASURES FOR ADMINISTRATION OF BORROWING INTERNATIONAL COMMERCIAL LOANS BY DOMESTIC INSTITUTIONS

19970908the People’s Bank of China

The State Administration of Foreign Exchange

Measures for Administration of Borrowing International Commercial Loans by Domestic Institutions

(Approved by the People’s Bank of China on September 8, 1997, promulgated by the State Administration of Foreign Exchange on September
24, 1997)

Chapter I General Provisions

Article 1

These Measures are formulated in accordance with the Regulations of the People’s Republic of China on Foreign Exchange Control and
other relevant provisions of the State Council for the purpose of improving the administration of the borrowing international commercial
loans

Article 2

The term “international commercial loans” mentioned in these Measures refers to funds raised and borrowed by domestic institutions
from financial institutions, enterprises, individuals or other economic organizations outside the Chinese territory or from financial
institutions with foreign investment within the Chinese territory, which are subject to contractual obligations for repayment in
foreign currency. Export credits, international financial leases, compensation trade repaid in foreign exchange, foreign exchange
deposits of institutions and individuals out of the territory (excluding foreign exchange deposits in banks which are approved to
conduct offshore banking business), project financing, financing under trade with the minimum term of 90 days and other types of
foreign exchange loans shall be regarded and administered as international commercial loans.

Article 3

The People’s Bank of China shall be the examination and approval organ of borrowing international commercial loans by domestic institutions.

The People’s Bank of China shall authorize the State Administration of Foreign Exchange and its branches offices (hereinafter referred
to as the foreign exchange bureaus) to be responsible for the examination, approval, supervision and administration of borrowing
international commercial loans by domestic institutions.

Article 4

A domestic institution must obtain approval from the foreign exchange bureau for borrowing an international commercial loan. An international
commercial loan agreement signed without the approval from the foreign exchange bureau shall be invalid. The foreign exchange bureau
shall not undertake foreign debt registration. The bank shall not open a foreign debt special account for it and the loan principals
and interests shall not be remitted abroad without authorization.

Article 5

Domestic institutions borrowing international commercial loans from foreign parties shall be restricted to:

(1)

Chinese-funded financial institutions authorized by the State Administration of Foreign Exchange to engage in foreign exchange loan
business operations;

(2)

non-financial enterprise legal persons approved by the departments authorized by the State Council.

Article 6

A financial institution borrowing an international commercial loan shall conform to the provisions of the People’s Bank of China on
the administration of the ratio of foreign exchange equity-debt of financial institutions.

Article 7

A non-financial enterprise legal person directly borrowing an international commercial loan from a foreign party shall meet the following
requirements:

(1)

having successively made profits over the previous three years, possessing an import-export business licence and engaging in an industry
encouraged by the State;

(2)

possessing a sound and complete financial management system;

(3)

for a trade-type non-financial enterprise legal person, its net assets shall account for not less than 15 per cent of its total assets;
for a non-trade-type non-financial enterprise legal person, its net assets shall account for not less than 30 per cent of its total
assets;

(4)

the sum of the international commercial loan borrowed and the surplus of the guaranty provided to a foreign party shall not exceed
50 per cent of the equivalent foreign exchange of its net assets;

(5)

the sum of the foreign exchange loan and the surplus of foreign exchange guaranty shall not exceed the foreign exchange revenue created
in the last financial year.

Article 8

A domestic institution shall borrow an international commercial loan on the basis of its own creditworthiness, and shall bear repayment
responsibility of its own accord.

Article 9

In the borrowing of an international commercial loan from a foreign party, a domestic institution shall strengthen the control of
cost. The total cost of its loan shall not exceed the total cost of a loan at the same period from a loan institution of the same
credit grading on the international financial market.

The foreign exchange bureaus shall supervise and direct the cost control in the borrowing of international commercial loans by domestic
institutions.

Article 10

A domestic institution borrowing an international commercial loan from a foreign party shall, in accordance with the provisions of
the State Administration of Foreign Exchange, submit the foreign loan statement for the previous quarter and the annual report on
the use of the international commercial loan to the foreign exchange bureau within the first ten days of each quarter.

Article 11

Foreign Exchange bureaus shall have the right to inspect the situations of the raising, using and repayment of international commercial
loans by domestic institutions. Loan institutions shall provide cooperation and submit the relevant documents and data.

Article 12

Without the approval of a foreign exchange bureau, a domestic institution shall not have the international commercial loan it has
borrowed deposited or directly paid out of the territory or converted into Renminbi for use.

Chapter II Medium-and-long-term International Commercial Loans

Article 13

The term “a medium-and-long-term international commercial loan” mentioned in these Measures refers to an international commercial
loan with a term of more than one year (not including one year), including a usance letter of credit with a term of more than one
year.

Article 14

The borrowing of a medium-and-long-term international commercial loan by a domestic institution shall be listed into the State plan
for the use of foreign capital.

Article 15

When borrowing a medium-and-long-term international commercial loan, a domestic institution shall apply to the foreign exchange bureau
by submitting all or part of the following data:

(1)

documents certifying that the borrowing is listed into the State plan for the use of foreign capital;

(2)

a document of project establishment approval for the loan;

(3)

a letter of intent on loan conditions, which shall include the name of the creditor, currency of the loan, amount, term and grace
period, interest rate, charges, early repayment intents and other financial conditions;

(4)

the source of repayment funds, repayment plan and the foreign exchange guaranty;

(5)

balance sheets in foreign exchange or Renminbi for the previous three years and other financial statements which have been verified
by a public accounting firm;

(6)

other relevant data as required by the foreign exchange bureau.

In addition to the provisions of the preceding paragraph, a branch of a financial institution borrowing a medium-and-long-term international
commercial loan from a foreign party shall also submit the relevant document of authorization from its head office (head company).

Article 16

The borrowing of an international commercial loan by a national institution resided in Beijing from a foreign party shall be directly
submitted to the State Administration of Foreign Exchange for examination and approval;

The borrowing of a loan from a foreign party by a national institution not resided in Beijing or by a local institution shall, after
being verified by the local foreign exchange bureau of the place where it is located, be submitted to the State Administration of
Foreign Exchange for examination and approval.

The branches of national and local financial institutions may make an application for approval only after they have been authorized
by their head offices (head companies).

Chapter III Short-term International Commercial Loans

Article 17

The term “a short-term international commercial loan” mentioned in these Measures refers to an international commercial loan with
a maximum term of one year (including one year), including inter-bank foreign exchange call loans, outward documentary bills, packing
loans and usance letter of credit with a term of more than 90 days but less than 365 days, etc..

Article 18

A short-term international commercial loan shall not be used for investment into long-term projects, fixed assets loans or other inappropriate
purposes.

Article 19

The foreign exchange bureaus shall implement administration of balance in respect of short-term international commercial loans borrowed
by domestic institutions.

Article 20

The balance control quota applied to short-term international commercial loans of domestic institutions (hereinafter referred to as
“the short-term loan quota”) shall be verified by the foreign exchange bureaus annually.

The balance of a short-term international commercial loan borrowed by a domestic institution shall not exceed the verified quota.

Article 21

The short-term loan quota of national financial institutions and non-financial enterprise legal persons shall be verified and made
known to lower levels by the State Administration of Foreign Exchange.

The short-term loan quota of local financial institutions and non-financial enterprise legal persons shall be examined and approved
by the foreign exchange bureaus of the place where they are located within the short-term loan quota verified and made known to lower
levels by the State Administration of Foreign Exchange.

Article 22

A Chinese-funded financial institution approved by the State Administration of Foreign Exchange to engage in international account
settlement businesses shall formulate the measures for the administration of usance letter of credit which shall be submitted to
the foreign exchange bureau for verification.

A Chinese-funded financial institution shall open usance letter of credit in accordance with the measures for the administration of
usance letter of credit that have been verified by the foreign exchange bureau.

A usance letter of credit with a term of more than 90 days but less than 365 days opened by a Chinese-funded financial institution
shall not use its short-term loan quota.

Article 23

If a non-financial enterprise legal person applies to a domestic financial institution with foreign investment to open a usance letter
of credit with a term of more than 90 days but less than 365 days, it shall be use its short-term loan quota.

Article 24

When applying to the foreign exchange bureau for a short-term loan quota, a domestic institution shall submit all or part of the following
data:

(1)

an application (including such contents as fund demand, situations of its credit-worthiness, purposes of the funds, etc.);

(2)

the previous year’s balance sheets and profit and loss statements verified by a public accounting firm;

(3)

a loan commitment letter of intention issued by the credit agency;

(4)

the foreign exchange receipts and expenditures in the previous year;

(5)

other data required by the foreign exchange bureau to be submitted.

Article 25

When borrowing a short-term international commercial loan, a non-financial enterprise legal person which does not implement the administration
of short-term loan quota balance shall have it reported case by case to the foreign exchange bureau, and shall have it included in
the short-term loan quota of the place where it is located.

Chapter IV Project Financing

Article 26

The term “project financing” mentioned in these Measures refers to the method of raising foreign exchange funds out of the territory
in the name of a domestic construction project, with the debt prepayment obligation to the foreign party by the project’s own expected
income and assets. It shall possess the following natures:

(1)

The creditor has no right of recourse over any assets and income other than the construction project;

(2)

The domestic institution is not required to mortgage, pledge or pay debts by using any assets, rights and interests as well as income
other than the construction project;

(3)

The domestic institution is not required to provide any forms of financial guaranty.

Article 27

The scale of financing with a foreign party in respect of project financing shall be incorporated into the State guidelines for borrowing
international commercial loan.

Article 28

The conditions for project financing shall be competitive and shall be examined and approved or examined and verified by the State
Administration of Foreign Exchange. With regard to the conditions for financing of project financing submitted to higher levels by
local authorities, after being preliminarily examined by the local foreign exchange bureau of the places where they are located,
they shall be reported to the State Administration of Foreign Exchange for examination and approval or examination and verification.

Article 29

When reporting the conditions for project financing to the State Administration of Foreign Exchange for examination and approval or
examination and verification, the project company shall submit the following documents:

(1)

an application, which shall include the methods for project financing, amount of money, market, as well as the term and interest rate
of the loan, the various charges and other financing conditions;

(2)

the project feasibility study report or other documents approved by the State Planning Commission;

(3)

documents certifying the incorporation of this project financing into the State guidelines for international commercial loans borrowed;

(4)

a project financing agreement;

(5)

documents with a nature of guaranty related to the project financing;

(6)

other necessary documents.

Chapter V International Commercial Loans Borrowed by Oversea Braches of Domestic Institutions

Article 30

The term “an overseas branch of a Chinese-funded financial institution” (hereinafter referred to as “an overseas branch”) refers to
a non-independent legal person branch which is established overseas by a Chinese-funded financial institution in accordance with
the local laws.

Article 31

A Chinese-funded financial institution shall decide the total amount of overseas financing for each of its overseas branches in accordance
with its overseas branches’ working capital amount, equity-debt ratio, volume of business for the current year and other indexes,
and shall have them reported to the State Administration of Foreign Exchange for the record before the end of February of each year.
If an overseas branch is to raise an international commercial loan equivalent to the value of more than US $ 50 million (including
US $ 50 million) on a one-off basis, its head office (head company) shall in advance report the matter to the State Administration
of Foreign Exchange for approval.

Article 32

Any financing which an overseas branch carries out overseas shall be incorporated into the equity-debt ratio administration of its
head office (head company).

Funds raised overseas by an overseas branch shall be only used for the development of overseas business. These funds must not be repatriated
for use into China without the approval of the State Administration of Foreign Exchange.

Article 33

A non-operating working office or representative office or other institutions established overseas by a Chinese-founded enterprise
shall not undertake financing overseas.

Article 34

Where a branch or other operating institution established overseas by a Chinese-funded enterprise borrows funds overseas in the name
of its head (parent) company with the authorization of its head (parent) company, the funds shall be regarded as the overseas loans
of the head (parent) company, and the head (parent) company shall undergo the relevant application and approval procedures in the
territory in accordance with the provisions of these Measures.

Chapter VI Legal Liability

Article 35

Where a domestic institution borrows an international commercial loan without authorization or fails to carry out inflation proof
work in accordance with the provisions of Article 42 of these Measures, the foreign exchange bureau shall give a warning, circulate
a notice of criticism and impose a fine of not less than RMB100,000 yuan nor more than RMB500,000 yuan. Where a crime is constituted,
criminal liability shall be investigated in accordance with the law.

Article 36

Where a domestic institution has the international commercial loan it has borrowed deposited or directly paid out of the territory
without authorization, or has it converted into Renminbi for use without authorization and without approval, the foreign exchange
bureau shall order it to make corrections, give a waning, circulate a notice of criticism and impose a fine in Renminbi of not less
than 30 per cent nor more than five times the amount of the illegally used funds. Where a crime is constituted, criminal liability
shall be investigated in accordance with the law.

Article 37

Where the overseas branch of a domestic institution, in violation of the provisions of Articles 31, 33 or 34 of these Measures, undertake
overseas financing without authorization, the foreign exchange bureau shall give the domestic institution a warning, circulate a
notice of criticism and impose a fine of not less than RMB100,000 yuan nor more than RMB500,000 yuan.

Article 38

Where, in violation of the provisions of Article 32 of these Measures, the overseas branch of a Chinese-funded financial institution
repatriates the funds raised overseas for use in China without authorization, the foreign exchange bureau shall order it to make
corrections and shall give the domestic Chinese-funded financial institution a warning, circulate a notice of criticism and impose
a fine of not less than RMB 100,000 yuan nor more than RMB500.000 yuan.

Article 39

Where a domestic institution submits false or invalid documents or other data to the foreign exchange bureau in order to fraudulently
obtain approval from the foreign exchange bureau, the foreign exchange bureau shall recover the documents of approval and impose
a punishment in accordance with the provisions of Article 35 of these Measures. Where a crime is constituted, criminal liability
shall be investigated in accordance with the law.

Article 40

Where a domestic institution fails to submit statements or data in accordance with the provision of these Measures, or refuses to
accept an inspection by and to cooperate with the foreign exchange bureau, the foreign exchange bureau shall give a warning, circulate
a notice of criticism and impose a fine of not less than RMB10,000 yuan nor more than RMB30,000 yuan.

Chapter VII Supplementary Provisions

Article 41

After signing an international commercial loan agreement, a domestic institution shall undertake foreign debt registration with the
foreign exchange bureau in accordance with the provisions on statistical monitoring of foreign debts and shall undertake repayment
procedures in accordance with relevant provisions.

Article 42

A domestic institution borrowing an international commercial loan must comply with the following principles based on the fluctuations
in international market exchange rates and interest rates and on the premise of not expanding the scale of foreign debts and not
extending the debt term in order to conscientiously minimize the foreign debt risks:

(1)

The matter shall be reported to the State Administration of Foreign Exchange for examination and approval where the amount to be borrowed
is low while the repayments are high;

(2)

A Chinese-funded financial institution that is approval to operate a foreign exchange trading business on a self-operation or agency
basis may carry out the business of preserving the value of international commercial loans in respect of its own debt or on commissions
accepted from other domestic institutions;

(3)

Where any other Chinese-funded financial institution commissions an overseas financial institution or a domestic financial institution
with foreign investment to carry out the business of preserving the value of its international commercial loan borrowed, the matter
shall be approved by the foreign exchange bureau;

(4)

An enterprise with foreign investment may itself commission an overseas financial institution or a domestic financial institution
with foreign investment to carry out the business of preserving the value of its international commercial loan borrowed.

Article 43

After a domestic institution has carried out the business of preserving the value of international commercial loan borrowed, the modification
of foreign debt registration procedures shall be undertaken in accordance with the provisions on statistical monitoring of foreign
debts.

Article 44

Provisions on the administration of foreign exchange accounts shall apply to the administration of account of international commercial
loans borrowed.

Article 45

These Measures shall apply to the borrowing of international commercial loans from the overseas branches of Chinese-funded financial
institutions by domestic institutions.

Article 46

These Measures shall apply to aircraft financial lease and international commercial loan funds which are borrowed for advance payment
on aircraft financial lease.

Article 47

The provisions of these Measures on project financing shall apply to domestic institutions which transfer overseas at fixed costs
the operating rights or rights to earnings of already established projects.

Article 48

The international commercial loans borrowed by Chinese-funded banks to engage in offshore banking operations shall be handled in accordance
with the provisions of these Measure on the administration of overseas branches.

Article 49

Foreign exchange loans which domestic institutions borrow from the offshore banking departments of Chinese-funded banks shall be regarded
and administered as international commercial loans.

Article 50

The provisions of Articles 1,2,3,8,9,10,11,12,13,17,18,35,36,37,39,40,41, 42(4), 43,44,45,46,47,49,51,52 and Chapter IV of these Measures
shall apply to enterprises with foreign investment. Other articles shall not apply to enterprises with foreign investment.

Article 51

The State Administration of Foreign Exchange shall be responsible for the interpretation of these Measures.

Article 52

These Measures shall enter into force as of January 1, 1998. The Measures for Administration of Borrowing International Commercial
Loans by Domestic Institutions, approved on September 26, 1991 by the people’s Bank of China and promulgated by the State Administration
of Foreign Exchange, the Circular on Matters Relating to Project Financing by Domestic Institutions, promulgated on July 14, 1995
by the People’s Bank of China, the Provisions on Administration of Overseas Financing by Overseas Branches of Chinese-funded Banks
Conducting Foreign Exchange Business, promulgated on April 17, 1996 by the State Administration of Foreign Exchange, and the Circular
on Strengthening the Administration of Financing Conducted by Overseas Institutions of Chinese-funded Enterprises, promulgated on
January 16, 1997 by the State Administration of Foreign Exchange, shall be repealed simultaneously.



 
The State Administration of Foreign Exchange
1997-09-24

 






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CONSTITUTION ACT, 1982 – page 22

NOTES (1) The enacting clause was repealed by the Statute Law Revision Act, 1893, 56-57 Vict., c. 14 (U.K.). It read as...

CONSTITUTION ACT, 1982 – page 21

CONSTITUTION ACT, 1982 – page 20

CONSTITUTION ACT, 1982 – page 19

CONSTITUTION ACT, 1982 – page 18

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